Among the most significant questions we get whenever it comes to Bankruptcy is if you can lose your business if you declare bankruptcy. The short answer is no, you are not likely to lose your business unless you would like to.
When it relates to Bankruptcy, if you are a manager of a company any kind of shape or size you can keep your business if you wish to, typically a failing company can pressure someone into insolvency, so because of those situations it could be better to allow the business go. In Australia, enterprises that become insolvent have a couple of alternatives like liquidation, voluntary administration and more. So bear in mind that it is individuals who declare bankruptcy not businesses.
Bankruptcy is a complicated area so get some specialist suggestions on this one, particularly if you have a business. Generally speaking, the financial liabilities in a business and personal debts go together when a business owner declares bankruptcy.
Are you a company Director?
There are a few crucial implications for directors of companies when it pertains to Bankruptcy in Australia: if you are bankrupt you can not be a director of a company – so this means that if you have a pty ltd company you absolutely will be required to retire as a director as soon as you’re bankrupt.
For some business owners, bankruptcy impacts their capacity to manage the business because of the licensing issues. For example,, if you operate a building company, your license will be suspended once you’re insolvent and as a consequence you can not trade without that license, so ensure you are asking the right questions when it comes to licenses and Bankruptcy in Australia.
However if your business is not affected directly by such issues, then you’ll want to reorganize the manner in which you operate your business. There are considerations when and if you declare bankruptcy as a business owner: you can not acquire heaps of financial debt in your business, then go bankrupt and after that open the doors the next day like not a single thing had occurred. There are laws in place to impede what is referred to as phoenix companies appearing out of the ashes of an old company.
Having said that, it’s just an issue of consulting with the right people about Bankruptcy. As an example, amongst the most typical presumptions is that you need to have a liquidator. But a lot of the time you are going to hear this from a liquidator who stands to gain a big commission- so beware with exactly where you acquire recommendations from and be careful about other individuals who may have their own agendas.
An essential thing to remember with Bankruptcy is to be cautious of general or simplistic methods to your business and Bankruptcy due to the fact that each business is likely to be different, and if you are not careful there can be some substantial ramifications. Commonly the right support for one entrepreneur is the incorrect guidance for the other. There are some fundamentals however, that you could benefit from. There is no obligatory reduction in the size of your business when you are insolvent. You can continue to employ and hire new staff. And you can continue to deal with your distributors under certain circumstances, the main one being you may need to meet the payment terms agreed upon in light of your bankruptcy.
So when it comes to Bankruptcy, don’t get overly overwhelmed about what you can and can’t do as a business owner, just get the advice that is right for your case. If you would like to learn more about what to do, where to turn and what concerns to ask about Bankruptcy, then feel free to consult Bankruptcy Experts on 1300 795 575, or visit our website: www.bankruptcyexperts.com.au.