Unsure how to regain control? Many business owners have felt the same way. At AVA we understand the challenges that the businesses face when dealing with debt. Our mission is to guide you through the complexities of business debt and provide effective solutions tailored to your situation.
Protect Yourself and Get Expert Advice on Insolvent Trading. Facing financial uncertainty in your business can be daunting, but understanding your obligations and options is the key to making informed decisions. Let’s steer your business back towards safe shores together.
Our team is made up of individuals who have held directorial position.
AVA excels in conducting thorough financial assessments.
AVA places a strong emphasis on transparent communication and stakeholder empowerment.
Business debt refers to the financial obligations your company owes to external creditors. It can include loans, outstanding invoices, the ATO or any other financial commitments. Managing business debt is crucial for maintaining financial health and ensuring the long-term sustainability of your business.
Personal Liability is where a company’s debt is made to be the directors personal debt.
These include disqualification, fines up to $200,000, and may lead to criminal prosecution.
Creditors can only take action against directors for their own debts whereas a liquidator can on behalf of all creditors.
A holding company can also be liable for the debts of a subsidiary if it allows the subsidiary to trade while insolvent.
For business owners, the ramifications of Insolvent Trading can be far-reaching. Personal liability looms large, meaning directors can be held responsible for the debts incurred by the business during the period of insolvency. This could sink your business and threaten your financial security (like losing your family home).
Serious consequences can arise from Insolvent Trading and can affect both the company and its directors personally, including:
> Civil Penalties for Directors: If a company is found to have been trading while insolvent, directors can face civil penalties. The Australian Securities and Investments Commission (ASIC) (see ASIC Regulatory Guide RG 217) may seek orders from the court for compensation payments to be made by the directors to the company for the benefit of creditors. Additionally, fines up to $200,000 per breach may be imposed on the directors under the Corporations Act.
> Criminal Charges: In cases where dishonesty is a factor in Insolvent Trading, directors may face criminal charges. This is particularly the case if it can be proven that the directors were knowingly involved in the company incurring debts when there were reasonable grounds to suspect insolvency. Convictions can lead to imprisonment and fines.
> Disqualification from Managing Corporations: Directors who have been found to engage in Insolvent Trading can be disqualified from managing corporations in the future. This disqualification is potentially a long-term consequence that can affect a person’s ability to conduct business.
> Personal Liability: Directors can be held personally liable for the company’s debts from when it became insolvent to when it ceased trading. This means that directors’ personal assets are at risk of being used to satisfy the company’s debts.
> Compulsory Winding-Up: The company may be placed into compulsory liquidation if a court determines that it is insolvent and has been trading insolvently. The court may order this on the application of a creditor, ASIC, or, in some cases, the company itself.
>Director’s Indemnity Insurance: It’s worth noting that director’s indemnity insurance may not cover Insolvent Trading, exposing directors to the full financial and legal ramifications.
>Adverse Effects on Credit Rating: A history of Insolvent Trading can negatively impact the credit rating of both the company and its directors, making it more difficult to obtain finance in the future.
>Recovery Actions by Liquidators: If a company goes into liquidation, the appointed liquidator has the power to take recovery actions against directors for Insolvent Trading. This may include clawing back payments made to directors or related parties at creditors’ expense before the insolvency is declared.
Beyond legal consequences, there’s a huge and heavy personal toll that comes with facing Insolvent Trading. The stress and worry can feel like a heavy anchor, dragging down your well-being and focus. But it’s not all doom and gloom – with the right guidance, you can chart a course through troubled waters. Proactive steps and early intervention might help you avoid the storm of Insolvent Trading altogether, safeguarding your hard work and legacy.
Contact the Insolvent Trading advice experts at AVA Advisory today at 1300 181 220 or Book an obligation-free, cost-free consultation.
AVA Advisory provides clear guidance on Insolvent Trading risks and resolution strategies tailored to your situation. With the right advice, directors can avoid personal liability and find the best path forward. Seek expert advice on your Directors Duties and options if you think you are trading while insolvent.
Connect with AVA Advisory today for a lifeline . Let’s work together to claim the financial storm of uncertainty around Insolvent Trading and set all towards a brighter future for you and your business. Don’t delay’- let us help you get through it all , not just for your sake – but also for those you care about the most. Book an obligation-free, cost -free consultation or call 1300 181 220 to discuss your options in confidence.
Now, Let’s Start Mapping Your Path to Financial Freedom.
Don’t wait – the earlier we start, the more debt relief options will be available. Contact us today on 1300 181 220 for an obligation-free, cost-free consultation. Share details of your situation and concerns in confidence.
With expertise on your side helping analyse business debt relief options, ATO debt advice, and negotiate agreements, you can look forward again. Clarity, relief, and a brighter future for you and your business are only a few steps away – fill out the form below for your free consultation.
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