When things go wrong in business, it is easy to feel like bankruptcy is the only way out. But depending on the circumstances, there may be better options, especially if you still have other businesses to run or want to protect your professional reputation.
At de Jonge Read®, we help business owners explore alternatives that resolve debt and protect what matters most. One recent case shows how the right approach, at the right time, can deliver a far better outcome.
Dan’s Story: A Tough Situation with Millions at Stake
Dan (name changed for confidentiality) was the director of a company that had gone into liquidation. After the collapse, he was personally liable for more than $4 million in debt, including a large ATO claim. On top of that, he had other family companies and financial ties that left him further exposed.
If Dan went bankrupt, he would be disqualified from being a director in his other businesses. It would have damaged his reputation, limited his options and potentially ended his career in business. But he got advice early and that made all the difference.
The Solution: A Better Alternative to Bankruptcy
Dan reached out to de Jonge Read® before things spiralled too far. Working with his accountant, lawyer and a registered trustee, we helped him take a different path — a Personal Insolvency Agreement under Part X of the Bankruptcy Act.
The strategy involved:
- Putting forward a lump sum offer to settle his debts
- Using a creditors’ trust to manage the funds
- Carefully documenting all related-party debts
- Managing communication with key creditors including the ATO
- Timing everything to minimise the period of disqualification
We guided the entire process from start to finish, helping Dan understand his options, prepare the paperwork and keep creditors informed and confident.
The Outcome: Debt Resolved, Directorships Protected
Dan’s total debt of over $4 million was settled for just over $120,000. The creditors, including the ATO, accepted the offer unanimously.
Because the trust and agreement were completed at the same time, Dan’s disqualification as a director lasted only a matter of seconds. He kept control of his other businesses and avoided the long-term consequences of bankruptcy.
What You Should Know
There are often more options than you think. Here are some key points to consider:
- The earlier you get advice, the more options you have
- Bankruptcy is not always the best outcome, especially if you are still in business
- Personal Insolvency Agreements can settle debt without the same restrictions
- Related-party loans and family company debts can be included if managed properly
- Laws around phoenixing, director penalties and ATO enforcement have tightened, so getting the structure right matters
At de Jonge Read®, we are across the latest rules and risks. We work with business owners every day to create solutions that are realistic, strategic and legally sound.
Think This Might Apply to You?
If your business has failed and you are now facing personal liability, especially if you have ATO debt or want to stay involved in other companies, get in touch.
You may have more control than you think. We will help you understand your options and find the best way forward for your situation.
Contact us for a confidential chat. We are here to help.
Did you know?
Phoenixing is another name of business restructure. Read more about business restructures and when this can be an option for you.
