How do I stay cool in an insolvency, liquidation crisis and protect my family?

How do you stay cool and calm under the pressure of mounting debt and pressure from creditors when your company faces insolvency and possible liquidation? How do you protect your assets from the ATO and possible liquidation and family from the stress? Nobody can fight battles in unfamiliar territory (like a financial crisis, ATO debt, insolvency law and liquidation procedure) without intelligence. Knowledge and informed strategy are your keys to success. The answer is to get an ally who knows the terrain (the terrain of insolvency law and liquidation process and pitfalls) and work with them (and your other allied advisors) to protect your assets from debt, liabilities and unplanned liquidation.

You are entering unfamiliar territory. And a common factor in stress is uncertainty. Take away uncertainty and you take away a lot of needless anxiety with it. Provide a way forward and help explain how it’s done and you get the other key stress buster – hope. Sure the problem is still there, but with the right strategy to protect assets, defeat debt and cover liabilities, the problem is defined and put into perspective. With the right protection and good allies comes confidence and renewed energy.

As a director or business owner, you are probably used to being in control of things, to being the one that makes things happen and provides the answers. So financial distress is not something you enjoy. But before you make any big decisions about what to do next, know this – you still have more power to protect your assets and family than you probably realise and with it the ability to construct good financial and business outcomes.

If you read Our Story then you will see that one of the crucial things that was missed was an appreciation that he had many strong positions (so opportunities to influence outcomes were missed) but also overlooked where he was weak (so hands were overplayed leading to personal liability and trouble). Insolvency and reconstruction and planned restructure is a complex area of law and finance. That is why many liquidators and (insolvency) lawyers have been tempted to charge through the roof and why some liquidators have been convicted of fraud and misconduct. Not all are bad but there are many horrific stories that go unreported and many more where lives and business wealth are needlessly battered by the process. But we digress.

The easiest way to stay cool under pressure, protect assets and avoid debts and liabilities dragging you down into unplanned liquidation is to have a plan and get an experienced ally that gets you the best possible asset protection result with the least risk. Go back to our page ‘Where do I start?’ There are some great tips there.

From a personal point of view, as long as you don’t become bitter about the experience, you do survive. If you read our Information Sheets and engage us to work with you and protect your assets, you will succeed and move on with confidence. When you get an experienced advisor on your side you are not alone with all your debts and liabilities. In fact Triple R will show you how to use those debts and liabilities to help protect your assets, legally. From a personal point of view, try to get through one day at a time and treasure the weekends when the creditors and debts, the lawyers can’t get to you. Use the weekends to rebuild your emotional strength and find some peace. But the main thing is getting the right strategy and expert ally in place.

So what about my family?

Whether we are talking wife, husband, kids, mum and dad or just friends, you need to keep the ones you love and who love you as safe as you can. In turn, if they see you are trying to do the best you can, the good ones will stick by you. There are two dimensions to looking after them – relieving the stress and minimising the financial pain. Both are achieved by following these steps:

1. Have a plan – show them you understand what went wrong (don’t make excuses) and tell them what will change. The plan (if it is the right one) will help minimise the financial impact AND give your family the all important ingredient – hope.
2. Show them you are talking to experts. this sends the signal of a new approach and more reason to hope.
3. Explain why it has come to this but explain that you have a way forward (no need to go into too much detail) and that you there are people who can help protect your assets.
4. You can even explain that there are a lot of myths about financial failure and that it is much more common than people realise (e.g. Bankruptcy is not advertised and tens of thousands go into bankruptcy each year and nearly every successful business has at some stage been close to insolvency – even Rupert Murdoch’s News Limited)
5. Liquidation of a company of which you are a director or shareholder will not necessarily affect you personally. Get some expert advice on personal liability as a director and to check for personal guarantees [read our Information Sheet answering the question How do I deal with Personal Guarantees?].
6. Explain that the three things that are really important to you are your family, their health, and providing for them in all ways including financially. Assure them that this will continue.
7. Don’t try to do it alone. You owe it to your family to make this one last effort – talk to an expert.
8. Don’t stick your head in the sand – many people damage not only their family but themselves by fiddling and worrying.