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Pre Liquidation Checklist for Directors and Advisers

Sep 18, 2018 | Written by Cliff Sanderson

There are about 10,000 company insolvencies a year.  You’d like to think that Directors and Advisers thought through the process prior to getting on the slippery slide, but that is not always the case.  Hence, we have prepared a concise Checklist of matters for Directors and Advisers to consider when liquidation seems the likely outcome.  You can get a copy of our downloadable Checklist here.  It’s in a handy format.  But to give you a taste, here is a list of some of the questions and memory joggers on the Checklist:


  • If the company is still trading, how many locations does it trade from?
  • How many staff do you now employ?


  • The usual process for winding-up a business is to address the practical and physical aspects first. In that situation it would be necessary to:  Shut the doors; Stop buying new stock and supplies; Terminate the employment of staff;  Notify the landlord; Notify creditors; Sell the remaining assets of the company and bank the proceeds to the company bank account.
  • Are you able to undertake those tasks yourself or will it be necessary to have assistance, probably a Registered Liquidator?


  • Do you have an asset listing?
  • Have you attempted to find a buyer for the whole business, or specific assets?


  • Do you have a list of all creditors and the total owed?

Tax Issues

  • Have you been lodging the BASs on time?
  • Does the company’s Running Account with the ATO include amounts for PAYG or Superannuation?  (Note: you can be personally liable for that debt)

Personal Guarantees

  • It is usual for a Bank to require a Personal Guarantee from a director for any Bank lending or facilities. How much do you owe the Bank and do they have security over your house?
  • It is usual for a director to sign a Personal Guarantee for any unpaid rent.  How long is left to run on the premises lease and how much is outstanding at present?
  • Often trade suppliers will have required a Personal Guarantee from a director as a term of trade. Did you sign any such Terms of Trade or any other specific Personal Guarantees?

Insolvent Trading

  • Consider when you first thought the company might be insolvent and whether the company incurred any new debts after that time?


  • If it turns out you need to appoint a Liquidator, is it likely all directors and shareholders will be in agreement with that approach?
  •  Have you been the director of any other companies that have entered liquidation in the last seven years?

Financial Accounts

  • When was the last set of financial accounts prepared and for what period?
  • Do the accounts show Director’s Drawings or “Director Loans” in the assets section of the Balance Sheet?

I don’t have the space, or typing speed to explain why, but there are good reasons for all of the above questions!

Cliff Sanderson

Cliff Sanderson