Liquidation

In most cases, NO, you are not liable for unsecured debt with creditors including the ATO – the debt goes with the business. There are some expectations such as Super and potentially PAYG with the ATO, depending on you history of lodging BAS’s. You of course also need to be aware of any Bank debt you have that may be secured or guaranteed by you personally, and leases and/or personal guarantees for other debt such as a vehicle.

The short answer here is YES. You can be a director of another company now or in the future but there are occasions where ASIC can ban an individual from being a director. This happens if someone has been a director of a number of failed companies or been found guilty of wrongdoing in the past.

Employees are one of the major parties impacted when a company goes into liquidation. Not only do they lose their jobs, but there is also a major concern with respect to getting paid for work that they have already done. This is not even considering any entitlements that they may be owed. As per legislation, employees are entitled to unpaid wages, superannuation, leave, and retrenchment. Learn more about what happens to employees when a company goes into liquidation

As mentioned above, employees are entitled to unpaid wages, superannuation, leave, and retrenchment. There are two major issues for employees; the amount of money collected from the sale of assets is insufficient and their position in the priority order of being paid. In many instances there is little or no remaining funds for employee entitlements. To address this issue, the Australian government introduced the Fair Entitlements Guarantee (FEG). Under the FEG, employees may be able to claim the following:

• Unpaid wages for up to 13 weeks
• Annual leave and long-service leave
• Payment in lieu of notice for up to five weeks
• Redundancy pay for up to a maximum of four weeks per year of service.

There is no defined time limit on liquidation and the process lasts as long as required. This is the case as some liquidations may involve court proceedings that are lengthy and time consuming. Despite this, as part of their legal obligations, the liquidator must complete the task in a timely and cost-effective manner. The liquidation is finalised when the liquidator distributes any surplus funds in priority order and submits their final report to ASIC. The company will finally be deregistered and the liquidation process complete.