What are Asset Protection Strategies?
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Are your personal assets safe?
Many business owners are under a false sense of security that their personal assets are safe due to their business being operated through a company structure. This is not necessarily the case. There are many areas that ultimately lead to exposure of your personal assets.
The business owner might be personally liable for the company’s debt if they have:
- Signed personal guarantees to trade creditors
- Division 7A loans
- Loaned money to company from personal resources
- Lodged BAS or SGC late
- Used the same financial institution for both home loan and business facilities
- Acted as an individual trustee of a discretionary trust
- A sole trader business
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Make the most of the PPSR
All security interests are registered on the Personal Property Securities Register (PPSR) which is a national online register. It is effectively a live noticeboard where anyone can register or view the registration of a security interest at any timeIn an insolvency event priority is largely determined by whether a party holds a validly perfected security interest. If a bank were to lend to a business, they would not do so without some sort of security.
This should be no different for directors and related parties who advance funds to their business, either at start up or during the life of the business to support it’s cashflow. Directors and related parties should always secure any advances to their business by registering an AllPAAP security interest on the PPSR. This allows them to be a priority creditor in an insolvency event and also affords some protection for business assets.
Did You Know?
Commercial Necessity Phoenix is legal and recognises the fact that sometimes the need to restructure (phoenix) may arise out of events outside of the business owner’s control. This type of phoenix is considered a business rescue.
