Pre-Liquidation Checklist for Directors
This guide assumes that you have already decided that the company is not viable and so needs to be wound-up in some way.
This page is set out as a list of questions to consider, click the link above for a version in checklist format with room for your notes.
There are a number of issues to consider and this list is designed so that:
- You can start thinking about the practical issues you will face; and
- Your Advisers can receive the relevant information and then provide you with the best advice.
Your Advisors will have more questions but this is a good start.
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 aspects first. In that situation it would be necessary to undertake the following tasks:
- 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?
Are the assets wholly owned by your company, or is there finance against them?
Do you have a list of all creditors and the total owed?
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?
Have you been lodging the BASs on time?
Does the company’s Running Account with the ATO include amounts for PAYG?
(Note: you can be made personally liable for that debt)
Is there any unpaid Superannuation deductions?
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 a Personal Guarantee from a director as a required term of trade. Did you sign any such Terms of Trade or any other specific Personal Guarantees?
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?