Quick Snapshot
- Industry: Health Consultancy, Victoria
- Total Debt: $130K (ATO)
- Strategy: Creditors’ Voluntary Liquidation (CVL)
- Outcome: 100% ATO debt cleared, personal liability extinguished, home protected
The company had stopped trading. The director had moved on.
But a registered company with $130,000 in ATO debt does not simply disappear because the doors have closed.
The Situation
A Victorian health consultancy director had ceased trading and returned to regular employment, leaving a registered company carrying $130,000 in ATO debt with no other creditors. The company was dormant, but the debt was not. With the ATO able to enforce against directors personally, a formal closure through Creditors’ Voluntary Liquidation was the only clean path forward.
The Problem
- The company had stopped operating but remained registered, leaving the director legally exposed to the ATO debt
- The ATO can pursue directors personally for unpaid company tax, including through formal enforcement action against personal assets
- Small Business Restructuring (SBR), a process that lets a business propose a repayment plan to creditors, was not available: the company had already ceased trading, and SBR requires the business to remain operational throughout the process
- An ATO payment arrangement was not viable: with no intention to keep operating, there was no mechanism to service the debt through the company
The Solution
de Jonge Read® identified a Creditors’ Voluntary Liquidation (CVL) as the right pathway: a formal process where the director appoints a liquidator to wind up the company in an orderly way, rather than waiting for the ATO to take enforcement action first.
This involved:
- Confirming CVL as the appropriate strategy given the single-creditor position and dormant company status
- Appointing a liquidator and managing the process end-to-end
- Walking the director through each step so there were no surprises
- Closing the company properly and on the director’s timeline, not the ATO’s
The Outcome
- $130,000 in ATO debt extinguished in full: 100% written off on completion of the liquidation
- Personal liability extinguished: no personal enforcement action taken
- Director’s mortgaged home protected
- Company formally closed, giving the director a clean break
Key Lesson
A dormant company with unresolved debt is not a problem that fades with time. Taking control of the closure before the ATO does is often what separates a clean outcome from a costly one.
If you are a director with a dormant company and unresolved ATO debt, speaking with de Jonge Read® early gives you clarity on what is still possible. Call 1300 765 080 for a confidential, no-cost conversation.
This Creditors’ Voluntary Liquidation helped a Victorian health consultancy director clear $130,000 in ATO debt and protect his home by formally closing his dormant company before the ATO took enforcement action.
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.moc.arjd@ofni
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
