Quick Snapshot
- Industry: Telecommunications
- Location: Melbourne, Victoria
- Total Debt: $572K
- Outcome: Debt resolved, no personal exposure
The Situation
A telecommunications contractor in Melbourne approached de Jonge Read® for help with mounting ATO debt, creditor pressure, and personal guarantee exposure after the business became financially unviable due to COVID-19 impacts.
When lockdowns were introduced, the company’s work pipeline collapsed almost overnight. Even once restrictions eased, the business struggled to recover. New contracts were difficult to secure and the director no longer wanted to continue operating in the industry.
Over time the financial pressure increased and the company accumulated $572,000 in total liabilities, including:
- $179,000 owed to the ATO
- $281,000 owed to trade creditors
- $112,000 in personally guaranteed debt
- Seven vehicles under finance
The vehicle repayments were becoming increasingly difficult to maintain, and the director faced significant personal exposure due to the guarantees attached to the finance facilities.
At this stage the business was no longer viable, and continuing to trade would have increased the director’s personal risk.
The Problem
The business was no longer viable, cash flow had deteriorated, and liabilities continued to increase. The director was exposed through personal guarantees, and without early action, the risk of personal financial consequences would continue to grow.
The Solution: de Jonge Read®’s Expertise
Our team developed a structured Controlled Exit strategy to resolve the debts and protect the director personally.
- Controlled sale of financed assets
Before implementing any formal insolvency process, we worked with brokers to arrange the sale of all seven company vehicles.
This allowed the business to repay more than $200,000 in vehicle finance, removing a major financial burden before moving forward. - Negotiating personal guarantee liabilities
Personal guarantees do not disappear when a company closes. They follow the individual.
We negotiated directly with the creditor to reduce the personal guarantee exposure by 46%, settling $112,000 in guaranteed debt for approximately $58,000. - Structured company liquidation
With the secured finance addressed and personal exposure reduced, we implemented a controlled liquidation of the company.
Through this process:
- 100% of ATO and unsecured creditor debts ($460K) were cleared
- The director avoided further personal liability
- The business was closed in an orderly and compliant way
The Outcome
The strategy allowed the director to exit the business safely and move forward without lingering financial risk. It demonstrates how a structured exit strategy can resolve significant business debt while protecting the director personally.
Key results:
- $460,000 ATO and creditor debts cleared
- 46% reduction in personal guarantee exposure
- $200,000 vehicle finance resolved
- Director exited the industry with no personal liability
Most importantly, the director was able to walk away cleanly and return to a career path he wanted to pursue, without the financial stress following him.
Key Lesson
When a business is no longer viable, delaying action can increase personal exposure and reduce the options available.
A structured exit strategy can protect the individual behind the business, resolve legacy debts, and provide a clear path forward.
If you are dealing with a similar situation, the team at de Jonge Read® offers confidential, no-cost initial advice to help you understand your options before the situation escalates.
This case highlights how business owners in Melbourne dealing with ATO debt, creditor pressure, or personal guarantees can take control early and achieve a better outcome.
Should you have clients or associates that you know are struggling with financial issues or need assistance in reviewing their business affairs in preparation for what’s around the corner, our team of Strategists would be pleased to discuss options that are available on how to best design and implement insolvency strategies. Contact us now on p. 1300 765 080 | ua.mo1775113947c.arj1775113947d@ofn1775113947i1775113947
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
