Among the biggest concerns we get whenever it comes to Bankruptcy is if you will lose your business if you declare bankruptcy. The short answer is no, you are unlikely to lose your small business except if you want to.
When it comes to Bankruptcy, if you are a manager of a company any shape or size you can retain your business if you wish to, typically a failing company can pressure a person into insolvency, so in light of those circumstances it may be better to let your business go. In Australia, enterprises that become insolvent have a few alternatives like liquidation, voluntary administration and more. So remember that it is individuals who go bankrupt not businesses.
Bankruptcy is an intricate area so get some professional advice on this one, especially if you have a business. Generally speaking, the financial debts in a business and personal debts go together when a business owner declares insolvency.
Are you a company Director?
There are a few crucial ramifications for directors of companies when it pertains to Bankruptcy in Australia: if you are insolvent you can not be a director of a company – so this implies that if you have a pty ltd company you absolutely will be required to stop working as a director as soon as you’re insolvent.
For some business owners, insolvency impacts their capability to manage the business due to the licensing issues. For instance,, if you run a building company, your license will be suspended once you’re insolvent and consequently you can not trade without that license, so be sure you are asking about the right inquiries when it comes to licenses and Bankruptcy in Australia.
Having said that if your business is not affected directly by such issues, then you’ll need to reorganize the manner in which you run your business. There are factors to consider when and if you go bankrupt as a business owner: you can not acquire loads of debt in your business, then declare bankruptcy and subsequently open the doors the following day like not a single thing had occurred. There are laws in place to prevent what is referred to as phoenix companies showing up out of the ashes of an old company.
Having said that, it’s just an issue of speaking with the right people about Bankruptcy. For example, some of one of the most common presumptions is that you require a liquidator. But most of the time you are going to come across this from a liquidator who stands to gain a big payment- so be careful with where you obtain suggestions from and be careful about other individuals who could have their own agendas.
An essential point to keep in mind with Bankruptcy is to be mindful of general or simplified techniques to your business and Bankruptcy due to the fact that each business is likely to be different, and if you are not cautious there may be some substantial implications. Often the right assistance for one small business owner is the wrong assistance for the other. There are a few fundamentals however, that you could benefit from. There is no mandatory reduction in the size of your business when you are insolvent. You can continue to recruit and hire new personnel. And you can continue to deal with your suppliers under certain situations, 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 help that is right for your case. If you wish to learn more about what to do, where to turn and what inquiries to ask about Bankruptcy, then do not hesitate to seek advice from Bankruptcy Advice on 1300 879 867, or visit our website: www.bankruptcy-advice.com.au.