When people in
Australia come to me wanting to speak about Bankruptcy, they are always full of
questions. The internet is full of information, but far too much of it is
confusing or contradicts itself, so I make it my mission to try and make things
clearer. One of the very most natural worries is 'Will I lose my business if I
declare bankruptcy?' The concise answer is no. If you are an owner of a
business any shape or size you can maintain your business if you wish to. In
Australia, businesses that end up being insolvent have a few options for
example, liquidation, voluntary administration and so on. It's individuals who
go bankrupt not companies.
Bankruptcy is a
complicated area so get some professional advice on this if you have a
business. Generally speaking, the financial obligations in a business and
personal debts go together when a business owner declares bankruptcy. There are
some necessary 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 will definitely need to resign as a director as soon as
you're bankrupt.
A restriction
that applies when you are actually bankrupt as a business owner is that you may
be in your own business as a sole trader only. Generally there are things you
have to disclose as an aspect of that but basically you can still run your
company. For some business owners, bankruptcy impacts 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 right
questions when it comes to licenses and Bankruptcy in Australia.
But if your
business is not impacted directly by such issues, then you'll have 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
business, then go bankrupt then open the doors the next day like not a thing
had happened. There are laws in place to stop what is called phoenix companies
appearing out of the ashes of an old company.
Having said
that, it's just a matter of talking with the best people about Bankruptcy. In
this situation you may believe you need a liquidator for your business, and you
could be right, but remember that every liquidator is distinct and have their
own motives. Liquidators earn money from your liquidation - heaps of money - so
exactly what advice do you believe you will get?
When it comes to
Bankruptcy, I believe that giving generic advice in this area is likely harmful
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 wrong 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 distributors under certain conditions, the main one
being you will need to meet the payment terms agreed upon.
So when it comes
to Bankruptcy, don't get too upset 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, precisely where to turn and what questions to ask about Bankruptcy,
then feel free to speak with Bankruptcy Experts Australia on 1300 795 575, or
visit our website: www.bankruptcyexpertsAustralia.com.au.
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