We Advise Directors of SME Businesses in Financial Distress
Boutique. Experienced. Outcome Focused.
We are specialists in Business Restructuring, Business Turnaround and Corporate Recovery
IRT Advisory has vast experience in advising businesses who are in financial difficulty, often through no fault of their own. If any of the five points below ring true then you need to act now before the situation gets out of control.
We are boutique
and outcome-focused
We are specialists in Business Restructuring, Business Turnaround and Corporate Recovery.
Hear Directly From IRT Experts
What are my options if my business can’t pay its debts?
If I appoint an external administrator, what happens to my personal assets? Will I lose my house?
In most cases, a company’s insolvency does not automatically affect your personal assets, as a company is a separate legal entity. However, if you have provided personal guarantees to creditors — such as banks, vehicle and equipment financiers, landlords or trade suppliers — those creditors may still pursue you personally for payment. Likewise, if you have used personal property (like your home) as security for company borrowings, that asset could be at risk if the lender enforces its security. Directors can also become personally liable if they fail to act after the Australian Taxation Office serves a Director Penalty Notice on them.
An external administrator’s role is to deal with company assets only, not personal ones, but they may investigate any transactions involving personal benefit. Obtaining early, independent advice can help protect your position and clarify your exposure before any appointment is made.
What happens to directors during an insolvency process?
Directors remain key stakeholders but (with the exception of Small Business Restructuring) they lose control of day-to-day operations once an external administrator or liquidator is appointed. They are required to assist by providing company records, completing a Report on Company Activities and Property (ROCAP), and making themselves available for questions. Directors may also be subject to review regarding potential breaches of duty, insolvent trading or preferential payments. However, directors can limit their potential personal exposure by cooperating fully and acting in good faith throughout the process.
Under Small Business Restructuring, directors remain in control of the company throughout the process but are required to work with the Restructuring Practitioner to develop and implement a restructuring plan.
Can a business be restructured and continue trading?
How do insolvency appointments affect employees and creditors?
Employees generally have priority entitlements in a liquidation, covering unpaid wages, superannuation, leave, and in some cases redundancy. Entitlements other than superannuation can also be supported by the Commonwealth’s Fair Entitlements Guarantee (FEG) scheme. Creditors are notified of the appointment and receive detailed reports outlining the company’s financial position and estimated returns. While in many cases unsecured creditors may not recover the full amount owed, professional management of the process ensures that assets are realised fairly, distributions are transparent, and statutory reporting obligations are met.
