NSW Commercial Lease and Closing Shop?

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eyadi

Member
26 February 2015
2
0
1
Hi Everyone,
I'd like to ask help or advice with the matter that I am currently facing, so, any answers will definitely mean a lot to me as I have been really confused and seeking for a confirmation.

So, my friend and I have a commercial lease with one of the shopping malls and at this stage, the business does not turn well and we are facing with the truth of paying rent late for 1 month.

It's been an unfortunate event to start with, because we spent all the money building up and paying rent and not using it for up to 6 months because of a dodgy and tricky builder we got where he kept delaying and increasing "variations" of costs that's eating our budget.

If we are planning to close the business, in case we cannot find any buyer or sublease, is it going to be OK for us? Is there any chance they'll chase our personal assets under commercial law?

In our agreement, we did not sign any personal guarantee, PG section also NIL and its under company Ltd name.

My solicitor told me it's safe but I just want to be certain because I am afraid if there's something he missed out and maybe anyone has some experience with this?


Thanks so much!
 

Tracy B

Well-Known Member
24 December 2014
435
72
789
Australia
Hi Eyadi,

Have you explained your situation to the landlord/agent? I'm sure, if you are just short on liquidity, some sort of payment arrangement could be negotiated.

However, if you are planning to wind up the company and not pay your debts, if the lease was entered into by a limited company, then the shareholders of that company would only lose as much as they put in for share-purchase price (i.e. investment in the company). If this is not paid up, you will need to pay up the remaining share purchase price. If it is fully paid up, then the shareholders (owners) will not bear any further liability. That is the advantage of setting up a company limited in liability.

In other words, your solicitor appears to be right.
 

eyadi

Member
26 February 2015
2
0
1
Thanks so much Tracy for your thought, I do appreciate it! Yes, atm I am currently still trying to negotiate with the landlord but since I have never got any experience relating this matter to start with and if possible we'd like for everything to work well for both sides and not stacking more debts or something that we cannot afford, that's why we are curious to know what will be the worst possible scenario that could happen and possibly take an early step if necessary..

Btw regarding what you mentioned about "fully paid up" otherwise I need to pay the remaining share purchase price, can I know what that means?

thanks again btw for your help!
 

Tim W

Lawyer
LawConnect (LawTap) Verified
28 April 2014
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822
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Sydney
If you have a solicitor already, then you should take their advice.
 
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