The Eight Stages Of Going Broke – The Company Story
If you are one of the many small company owners who constantly worry about going broke and require more painful detail then read on.
Basically, there are 8 Stages:
- A long period when you drive your creditors mad by not communicating with them or giving repeated failed promises to pay. Creditors are generally very gullible people who will swallow hard luck stories and promises to pay as well as accepting minimal payments. Often, it is only when you stop communicating or tell them to get lost that they go all crazy and get legal.
- A notice giving you 21 days to pay up (“A statutory demand”).
- Court proceedings which immediately freeze your bank account.
- From there, it can all be over in a month or so, with a court order winding up the company and appointing a liquidator.
- Directors hand over the books and assets, fill out a questionnaire being a report on the affairs of the company and then stand aside.
- The liquidator can sue people to recover money or property which has disappeared in dodgy dealings. “Dodgy Dealings” are the sort of things that you would think about doing if you had a company which was going bust. For instance, repaying your mates, not repaying the creditor that sued you, selling assets off cheap, putting assets in the name of your brother in law, saying that company money is a loan and generally defrauding creditors.
- The money recovered pays the liquidator’s fee, then the legal costs of the creditor who took the court action and so on. Traditionally there is usually not much left, if anything.
- The company is deregistered and it is all over.
I hope that this is enough to flesh out your depressing 3 am deliberations. If not, speak to your accountant.