When people in
Australia come to me hoping to speak about Bankruptcy, they are typically full
of questions. The internet has lots of information, but far too much of it is
baffling or contradicts itself, so I make it my mission to try and make it
clearer. One of the very most usual problems is 'Will I lose my business if I
declare bankruptcy?' The quick answer is no. If you are an owner of a company
any shape or size you can keep your business if you want to. In Australia,
businesses that become insolvent have a few options for instance, liquidation,
voluntary administration and so on. It's individuals who go bankrupt not
companies.
Bankruptcy is a
complex area so get some expert advice on this one if you have a business.
Generally speaking, the financial debts in a business and personal debts go
hand in hand when a business owner declares bankruptcy. There are a few
essential implications for directors of companies when it pertains to Bankruptcy
in Australia: A bankrupt can not be a director of a company, so if you have a
pty ltd company you are going to need to resign as a director soon after you're
bankrupt.
A limitation
that applies when you are bankrupt as a business owner is that you can be in
your own business as a sole trader only. Generally there are things you have to
reveal as an aspect of that but generally you can still run your company. For
some business owners, bankruptcy affects their ability to run the business
because of the licensing issues. As an example, if you run a building company,
your license will be suspended once you're bankrupt and therefore you can no
longer trade without that license, so make sure you are asking the ideal
questions when it involves licenses and Bankruptcy in Australia.
However if your
business is not impacted directly by such issues, then you'll will need to
restructure the way you run your business. There are considerations when and if
you go bankrupt as a business owner: you can not acquire heaps of debt in your
company, then go bankrupt and afterwards open the doors the next day like
nothing at all had happened. There are laws in place to avoid what is called
phoenix companies popping up out of the ashes of an old company.
Having said
that, it's just a point of speaking with the suitable people about Bankruptcy.
In this circumstance you may believe you need a liquidator for your company,
and you could be right, but keep that in mind every liquidator is unique and
have their own motives. Liquidators profit from your liquidation - heaps of
money - so what advice do you think you will get?
When it comes to
Bankruptcy, I think that giving generic advice in this area is likely unsafe as
it can have very considerable implications for directors and business owners.
This is because it is one of those cases where what the right advice for one
business owner is the inappropriate advice for the other. There are some
fundamentals however, that you may benefit from. There is no limit to the size
of the business you run when you are bankrupt. You can employ staff. You can
constantly deal with your manufacturers under certain conditions, the main one
being you will need to meet the payment terms agreed upon.
So when it
concerns Bankruptcy, don't get overly worried about what you can and can't do
as a business owner, just get the appropriate advice ... If you want to learn
more about what to do, exactly where to turn and what questions to ask about Bankruptcy,
then feel free to consult Bankruptcy Advice Australia on 1300 879 867, or visit
our website: www.bankruptcy-advice.com.au/
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