Company & Personal Debt

Right now, you may feel as though there is nowhere to turn. However, LemonAide is here to answer every question you may have about your company and personal debt – and how these debt positions may intertwine with each other.

So, how is LemonAide different to a Liquidator? Put simply, a liquidator can’t offer specific answers to your questions, especially the question of how a liquidation will affect your personal asset position. This is because liquidators have a fiduciary duty to creditors. Before making any rash decisions or signing the dotted line, we recommend you chat with LemonAide first!

                        Here are some clients we have helped over the years and the difference it had made to their lives…… 

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How a lack of knowledge may financially kill you

One of our clients ran a cleaning business in Sydney, which had a significant debt problem with the Australian Taxation Office (ATO). Fortunately, the business had been structured correctly, with only the husband, Ben, as director.

We helped Ben and his wife, Cheryl, save the business – one that was viable without the massive debt situation. Once the business had been saved and was running again, we placed it into liquidation.

Also, in his capacity as the director of the original company, Ben had not lodged a Business Activity Statement (BAS) or a Superannuation Guarantee Charge (SGC) form in more than 2 years. It meant he was personally liable to the ATO for some of the GST and all the outstanding PAYG and Superannuation, totalling around ¾ of the ATO’s total debt. Ben would never be able to pay off this amount in 18 years, let alone manage in 3 years.

As Ben had not lodged the BAS or SGC forms on time, he received a lockdown Director Penalty Notice (DPN) for over $268,000 from the ATO. The only way to deal with a lockdown DPN is to either pay it or go bankrupt. He didn’t have the funds to pay it or propose a formal agreement, so bankruptcy was his sole solution.

If only Ben had known to lodge the company BAS and SGC forms on time, he then would have been able to save himself personally.

However, the ending wasn’t all doom and gloom! LemonAide was able to save the family house as Cheryl purchased Ben’s share of the current and future equity in the house, legally and ethically. It meant all the assets were saved: the business, the business assets (primarily cars) and their family home.

If you’re facing debt issues in your company and personally, we can help you. Complete the form below, and we will call you to arrange an in-depth discussion.

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Going into bankruptcy to come out

One of our elderly clients, Dennis, was entrusted to maintain and grow a generational farming business with other members of his family. Due to marital discord, the family had to purchase back the shares of an ex-partner, Sue.

Smartly, Sue arranged a personal guarantee from each family member involved. After the deal was signed off, members of the family and the company didn’t pay the entire agreed amount – despite Sue upholding her part of the agreement by resigning as a company director and shareholder.

Instead of continually arguing with the family, Sue petitioned to put the family’s farming company into liquidation, which put the family’s way of life in jeopardy. However, Sue didn’t stop there. She also bankrupted each family member who had personally guaranteed an amount to be paid to her.

Dennis decided not to acknowledge the bankruptcy for over 9 years, an error that could have led him out of the situation 3 times over if he had lodged his paperwork with the bankruptcy trustee. Even though the debt could be paid off through parcels of land held in the name of other family members, Dennis still needed to go bankrupt to make a release application.

While the result was positive for the client, please remember that the time of your bankruptcy doesn’t begin until you lodge the documents and have them accepted by the Official Receiver (AFSA). By avoiding this task, you may remain in bankruptcy indefinitely.

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