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The company director is required to cooperate with the liquidator during the insolvency process by promptly completing their Report as to Affairs form and providing all required company books and records.

Winding up is a process where a company’s outstanding matters are finalised, its assets are liquidated and it ceases to exist as a company. If you have received a winding up order, then ideally you should pay the debt or prove that you are solvent to the courts and creditors.

Insolvent trading is the law under the Corporations Act section 588G that says that if a company is insolvent and a director allows the company to incur a new debt, then the director can be personally liable for the new debts incurred.

While bankruptcy can result once a company is in liquidation, it isn’t always the case. However, it is more likely if you have personally guaranteed the debts that are owed by the company. In this situation, creditors may reserve their right to recover the debt from you personally. The liquidator may also pursue you for a settlement in the event you were trading the company while it was insolvent or if you breached any laws.

This is possible although should not be something that becomes a regular strategy. You should seek professional advice as this process requires careful planning.

You will need to seek tax advice as to how this situation will affect you. Liquidators that are appointed by the court are not required to keep shareholders updated on the status or outcome of the liquidation.

The company director is usually not liable for the company’s debts unless they have personally guaranteed debts, have an expired Director Penalty Notice from the Taxation Office (prior to when an administrator has been appointed), they have been found guilty of insolvent trading, or owe certain personal liabilities.

This depends on the amount of money that can be obtained from the trustee in bankruptcy who is selling the bankrupt’s assets and from any cash amounts the bankrupt holds. Often you will just be paid a percentage of what is available if there is insufficient money to pay all creditors.

One option is to use equity in your property to organise a short-term loan. You will need to seek professional advice for this strategy.