Signs that may indicate your company is in financial difficulty include ongoing losses, poor cashflow, unpaid creditors outside usual trading terms and problems obtaining finance.
If you receive a s222AOE penalty notice from the Commissioner of Taxation for your company’s unpaid tax, you should immediately seek professional advice. Failure to take appropriate steps within 14 days may result in the Commissioner taking recovery action against you personally for an amount equivalent to the unpaid tax. Read more how to tell whether your company is in financial difficulty
What do I do if my company is in financial difficulty?
If your company is insolvent, do not allow it to incur further debt. Unless it is possible to promptly restructure, refinance or obtain equity funding to recapitalise the company, generally, your options are to appoint a voluntary administrator or a liquidator.
If your company is insolvent, or there is a real risk of insolvency, your duties as a director are expanded to include the interests of creditors (including employees and other stakeholders). As well as general directors’ duties, you also have a duty to prevent your company trading if it is insolvent. Read more about directors' duties
What are the consequences of insolvent trading?
Insolvent trading can have serious consequences for directors. There are various penalties associated with insolvent trading, including civil penalties, compensation proceedings and criminal charges. Read more about the consequences of insolvent trading
How does an external administration affect me as a director?
What is my role in assisting an external administrator?
As a company officer, you must assist any external administrator (e.g. liquidator, receiver, administrator) who has been appointed to your company. You must provide reports as to affairs (commonly known as RATAs), records, information and other assistance. Read more role in assisting an external administrator
National Insolvent Trading Program
ASIC’s National Insolvent Trading Program is a focused approach to dealing with possible insolvent trading before it occurs. It involves a review of a company for the purposes of ensuring compliance by directors of their duties, as set out in section 180 of the Corporations Act and directors’ duties to prevent insolvent trading under section 588G of the Act. Read more about National Insolvent Trading Program
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