Resources & FAQ — Axe Pre-Insolvency

Question 1

What is insolvency and how do I know if my business is insolvent?

Accepted Answer

A company is insolvent when it cannot pay its debts as and when they fall due. Signs include: you're relying on credit to pay wages or suppliers, creditors are threatening legal action, the ATO has issued garnishee notices, or you're personally funding the business to keep it afloat. If any of these apply, you need advice now — not next month.

Question 2

What happens if I do nothing?

Accepted Answer

Doing nothing is the worst option. If you continue trading while insolvent, you risk personal liability for company debts — meaning creditors can come after your personal assets, including your home. Directors can also face disqualification and civil or criminal penalties. The earlier you act, the more options you have and the lower your personal risk.

Question 3

What is voluntary administration and when should I use it?

Accepted Answer

Voluntary administration is a formal process where an independent administrator takes control of your company to assess whether it can be saved. It immediately stops most creditor actions, giving you breathing room. It's best used when the business has a viable future but needs time to restructure debts or find a buyer. Timing is critical — it works best when initiated before creditors take action.

Question 4

What is the difference between voluntary administration and liquidation?

Accepted Answer

Voluntary administration is about exploring options — the goal is to find a way to save the business or reach a better outcome for creditors than immediate liquidation. Liquidation is the wind-up process — assets are sold, creditors are paid in order of priority, and the company is deregistered. Administration can lead to liquidation if no viable restructure is found.

Question 5

Can I restructure without going into formal insolvency?

Accepted Answer

Yes — and in many cases, informal restructuring is faster, cheaper, and less damaging to your reputation. This involves negotiating directly with creditors, refinancing debt, selling non-core assets, or reducing costs. It requires creditors to agree, so it works best when you still have goodwill with them and act before things deteriorate too far.

Question 6

Will I lose my house if my company goes into liquidation?

Accepted Answer

A company is a separate legal entity, so its debts are generally not your personal debts. However, if you've given personal guarantees on business loans or leases, those creditors can pursue you personally. Directors can also face personal liability for insolvent trading. This is exactly why getting advice early is so important — to understand and limit your personal exposure.

Question 7

What are my duties as a director when the company is in financial trouble?

Accepted Answer

Under the Corporations Act 2001, directors have a duty to prevent insolvent trading. If you know (or should know) the company is insolvent and you allow it to incur new debts, you can be personally liable for those debts. You also have duties to act in good faith, in the best interests of the company, and to keep proper financial records. Seek advice immediately if you're unsure.

Question 8

How much does it cost to get advice?

Accepted Answer

Your initial consultation with Axe Pre-Insolvency is completely free. We'll assess your situation, explain your options, and give you an honest view of the likely costs of each path. Formal insolvency processes do involve fees — these are typically paid from company assets, not your personal funds. We'll be upfront about costs before you commit to anything.

Question 9

How quickly do I need to act?

Accepted Answer

As soon as possible. In insolvency, time is your most valuable asset. The earlier you engage an advisor, the more options you have and the lower your personal risk. If creditors are already threatening legal action or the ATO is chasing you, call us today — not tomorrow.

Question 10

Is my consultation confidential?

Accepted Answer

Absolutely. Everything you tell us is strictly confidential. We understand the sensitivity of financial distress and the importance of discretion — for you, your family, and your business relationships. We will never share your information without your consent.

Know Your Options Before It's Too Late.

Quick Reference Guides

Warning Signs Your Business Is in Trouble

Director Duties in Financial Distress

Voluntary Administration vs Liquidation

Personal Guarantees: What You're Actually Liable For

Frequently Asked Questions

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