A company with a tax debt can be voluntarily placed in liquidation by its director/shareholders. Before this occurs, a company’s director should seek professional advice about the options available to the company and any risks or problems which liquidation may cause. We can help with providing this advice and where appropriate, in acting as Liquidators of a company.
The costs associated with a liquidation of a company is an important factor for a director in deciding what to do. This includes whether a director will personally have to pay any of a Liquidator’s costs.
How are a Liquidator’s costs paid?
A Liquidator’s costs are often paid from funds recovered from the sale or realisation of a company’s assets. The payment of a Liquidator’s costs is generally subject to approval by creditors. If a company has sufficient assets which can be sold or collected to pay a Liquidator’s costs then a director will not have to contribute any amount to pay a Liquidator.
There may be other means where a Liquidator may be able to recover funds to pay their costs, such as through pursuing legal claims or recover actions.
What happens if a company has no assets or funds to pay a Liquidator’s costs?
If a company has no assets or funds available to pay a Liquidator’s costs, the Liquidator will ask the director to arrange for some funds to be paid to meet their costs. Here at TAX DEBT SOLVED, we will ask for no more than $5,500 to be made available to meet our costs if a company has insufficient assets available to pay them.
Whilst this may seem like a large amount, there is various work which needs to be performed by a Liquidator including making various ASIC lodgements, collecting and reviewing the company’s records, issuing at least two reports to creditors and lodging a report with ASIC regarding the company’s circumstances.
Contact us for assistance
If your business has tax debts which it is unable to pay, contact us at TAX DEBT SOLVED for a free confidential discussion about your circumstances. If after having discussions with us you may wish to place your company in liquidation we will be able to advise you whether any amount may be required to be paid up front to meet our costs as Liquidators.
