Success Stories: Buying your business back from a Liquidator.

A client was recently referred to Pearce & Heers by his accountant. He was the director of a company, which was facing liquidation by the ATO in nine days’ time. The business employed about 120 staff and owed about $850,000 to the ATO in PAYG Tax and GST and also a further amount of approximately $200,000 in unpaid superannuation which is payable to the ATO as Superannuation Guarantee Charge.

Background and Initial Meeting

We had an initial meeting with the client whereby we discovered the following further background information:

  • The company had assets (other than debtors) which had a minimal value of probably less than $20,000;
  • The company had debtors of about $75,000;
  • It was unlikely that the director would be liable for any of the ATO’s debt for PAYG Tax under the ATO’s director penalty provisions as he had not received a director penalty notice and had been making BAS lodgements within three months of the required timeframes;
  • The director would be liable for a large amount of the Superannuation Guarantee Charge payable to the ATO under the ATO’s director penalty provisions;
  • Whilst the business was not profitable, the director advised this was because he had been through divorce proceedings, resulting in him not being able to spend as much time in the business as necessary. The director considered that he could make the business profitable in the future.

Options Available

The only feasible option available to the director was to buy the company’s assets from the Liquidator once the company had been placed in liquidation and then after the date of liquidation see if it was possible to re-start some parts of the company’s business.

Pearce & Heers arranged a meeting with the Liquidator and the director on the date of liquidation and provided the Liquidator with relevant information regarding the company including the required ASIC forms. We also made arrangements with the director to provide the company’s records to the Liquidator.

Successful Outcome

After meeting with the Liquidator, the Liquidator advised he advised that he did not intend to trade on, or seek to sell the company’s business, as it was not feasible to trade the business on and the business had no value. Pearce & Heers helped the director submit an offer to the Liquidator to purchase the company’s assets, which was accepted.

Having purchased the company’s assets, the director was able to establish a similar business to that of his initial company.

Proceeding in the above manner avoided the risk of the director possibly being involved in illegal phoenix activity, or committing offences under the Corporations Act, which may have been the case if he had sought to transfer some of the company’s assets or business to himself prior to liquidation.

Contact us for advice

If your company is in financial difficulty and you would like to consider all options which may be available to you, please get in contact with Pearce & Heers for a no-obligation meeting.

GET IN TOUCH

We’re happy to answer any questions you may have, so please don’t hesitate to call us and schedule a consultation.

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