VIC Separation with De Facto Lead to Bankruptcy - Liable for Debt?

[DAW338]

I am going through a de facto divorce and my ex and I established the company 12 years ago. 5 years ago we made it as Pty Ltd and I was made the sole director for the company. After the separation, she did not allow me to get my tools of trade that were left inside the property and threatened trespassing, etc (as she still lives there) and did not have any choice but to declare bankruptcy as there are outstanding debts and can not continue on with the trade.

She is a direct beneficiary of the company and has been receiving weekly allowance through it. Basically, the family lived through the earnings of the company. Now she does not want to share half of the debt incurred by the company saying she I am the sole director and is the only one responsible for it.

Is she liable to that debt, especially that she did not allow me to retrieve my tools of trade thus was not able to continue trading and pay off debts?

 

[Sophea]

Hi there,

A company debt must be paid by the company not its directors or shareholders. The whole point of a Pty Ltd is to limit the liability of the directors and shareholders. Shareholders are only liable to pay the value of their shareholding. Directors are generally not liable for company debt unless they breached their duties such as traded while insolvent etc.

Therefore as long as the company is not trading whilst insolvent neither of you should be liable for the company debts. If the company is trading whilst insolvent you may have issues. Read this: http://asic.gov.au/regulatory-resou.../directors-consequences-of-insolvent-trading/

 

[DAW338]

It states that amounts lost by creditors can be done against a director personally. Does this mean that I can be personally bankrupt? Will this affect the family law proceedings if they declare me bankrupt before the proceedings end, taking into account the reason why the company was forced into liquidation?

"Compensation proceedings for amounts lost by creditors can be initiated by ASIC, a liquidator or a creditor against a director personally. A compensation order can be made in addition to civil penalties."

 

[Sophea]

Yes that's correct, if you are trading whilst insolvent, creditors can come after you directly.

Check out this fact sheet on bankruptcy in the family court.http://www.familycourt.gov.au/wps/w...&CACHEID=fb118960-1031-406b-bab1-7e2c2c8ea0c0

 

[DAW338]

I was not trading whilst insolvent, the liquidator informed me though that they can go after my farm? We have sold everything that was owned by the company and was not sufficient to pay all the debts.