The stick – If a company is insolvent then a director may be personally liable for debts that the company incurs.
So what? A director will need to take action to ensure no further debts are incurred, or if they are, then they are paid in full.
The carrot – the Law provides a range of practical options for directors who suspect their company is insolvent. So what? If a director acts quickly, those steps can save the business and protect the director from personal liability.
If a company incurs a debt, say to a supplier, then a director is not automatically personally liable for that debt.
But if the company was insolvent then it’s possible the director will to pay the debt to that supplier themselves – from their own money.
There may be a legal action against the director by either the liquidator, ASIC or even the supplier.
Does that mean your house is potentially on the line – yes!Absolutely! There are a number of actions that can be taken to save the business and avoid the personal liability.
But the opposite is also true – if you do nothing then a director is far more likely to face the prospect of personal liability.
Don’t worry! At Dissolve we provide free advice. Contact us and we will be happy to discuss your situation.
At Dissolve we are experienced in providing a range of solutions. We’ve listed a few below. But there are a whole range of possibilities.
Saving your company and avoiding personal liability through a Voluntary Administration.
Restructure the company which could involve reducing costs or implementing asset protection strategies.
Sometimes we liquidate the company or sale of the business to better protect the director.
Yes that’s understandable. It’s a complicated area. In fact, we’d say you are unlikely to be able to understand all of the issues yourself. You will need advice from an insolvency expert.
