As the Director – am I going to lose my home if I liquidate the company?
The most common question we are asked when clients contact us for advice is – will I lose my home if I liquidate the business.
Well, the short answer is NO. I have seen hundreds of liquidations where Directors keep their homes.
Company liquidation is by definition about your company and not your personal assets.
You as the Director are protected by Company Law – and have limited liability for its debts – hence the Pty LTD
So for all UNSECURED company debt – this should not affect your personal assets subject to some considerations
What you need to be careful of is:
- Does the company have a secured loan with eg. A bank…….and is that loan secured by you or your assets?
- Have you signed any personal guarantees or director guarantees with suppliers or for a lease…….as you will be personally liable for this debt
- What is the current status with the ATO – have they issued you a Director Penalty Notice – as again, there may be some personal liability here? If you have outstanding Pay As You Go Tax or super then you need to get on top of the situation quickly
- Have you recklessly incurred unpaid debt with your creditors when you should have known the company could not afford to continue trading and you knew the company was insolvent?
You need to fully understand these major 4 things prior to liquidating a business. But you need to act quickly!