What really happens in the first three weeks of liquidation? In this revealing episode, Darren Vardy walks you through the chaos of the initial period, explaining why creditor calls stop immediately, how directors experience relief despite the circumstances, and what the typical 6-9 month timeline looks like. Learn about personal guarantees and how to minimize exposure, understand why most directors move into PAYG employment afterwards, and discover how liquidation provides clarity and closure. Darren shares insights on asset realization, going concern sales, and why directors often say the weight lifted was worth the process.

KEY TOPICS COVERED:

• Why the first 2-3 weeks are described as 'chaos' • What happens to creditor calls after liquidation appointment • The immediate relief directors experience despite the circumstances • Understanding personal guarantees and exposure • The typical 6-9 month liquidation timeline • Why directors have minimal involvement after the first few weeks • Asset realization strategies and going concern sales • What happens to directors after liquidation - employment vs new business • How liquidation provides clarity about personal financial impacts • Why most directors only want to see the liquidator once

KEY TAKEAWAYS:

✓ The first 2-3 weeks are chaotic as liquidators gather information and secure assets ✓ Creditor calls stop immediately after appointment - massive relief for directors ✓ Directors experience weight lifted off shoulders despite business failure ✓ Personal guarantees on leases and vehicles are often unavoidable in practical terms ✓ Typical liquidation takes 6-9 months from appointment to deregistration ✓ Directors have minimal involvement after the first few weeks ✓ Most directors move into PAYG employment rather than starting new businesses ✓ Liquidation provides clarity about personal exposure and next steps ✓ Going concern sales are less common than asset-only sales ✓ Directors who care about outcomes stay engaged and want to maximize creditor returns

Who Should Listen: Business owners, company directors, lawyers, accountants, and anyone wanting to understand financial distress warning signs.

About the Host:

Darren Vardy - Managing Director of Insolvency Options and Registered Liquidator with over 30 years of experience in business recovery and debt solutions. Darren has helped thousands of businesses and individuals navigate financial distress and find practical solutions to complex problems.

Connect With Us:

• Website: insolvencyoptions.com.au  • Phone: 1800 463 328 • LinkedIn: https://www.linkedin.com/in/darrenvardy/

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Co-host: Anthony Perl

Produced by: Podcasts Done For You

The first three weeks of liquidation what directors can expect.

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Welcome to IO Insolvency Options

with Darren Vadi, the Managing

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Director of Insolvency Options and

a registered liquidator with over

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30 years of experience helping

businesses and individuals.

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Navigate financial challenges.

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In today's episode, Darren walks

you through the first three weeks

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of liquidation revealing why he

describes this period as chaos.

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And when directors finally experience

relief, he explains what happens

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to creditor calls, how long the

process typically takes, and why

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most directors say the weight lifted

off their shoulders was worth it.

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You'll learn about personal guarantees,

the typical six to nine month

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timeline, and what life looks like

for directors after liquidation.

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I'm your co-host, Anthony Pearl.

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Let's dive into unlocking

more about insolvency options.

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Darren, we've touched on this subject

of liquidation a few times in previous

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episodes, and I think it's an important

one that we could have further discussion

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a little bit and understanding what those

initial first three weeks might be like of

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going through this process and maybe talk

us through what it is when you get to that

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situation, how you find the business that.

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Right.

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And have that initial conversation

and say, we are going down this path.

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Darren Vardy: Sure.

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So look, the first couple of weeks

after our appointment, as I say to most

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directors, they say, what can we expect?

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And my general response is chaos.

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What you'll expect as from myself is that

I need to get my head around this entire

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business, whether it's trading or not.

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If it's trading, I need to get on

top of the trading of the business.

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In the short term, we need to

implement some immediate strategies

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as to what is gonna happen with the

business, if it's trading, or what

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is gonna happen with the assets.

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If it's not trading, how

are we gonna realize?

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So for the first sort of two or three

weeks, we are going to be gathering.

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Asking for the provision of a lot of

information to enable us to work out

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what the position is, to then work out

a strategy to deal with that position.

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One thing that the directors don't then

deal with is the phone calls from the

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creditors because they all then go through

the insolvency practitioner's office.

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So quite often, whilst we get

through that chaotic period of

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the first two to three weeks.

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In the information gathering and

dealing with securing assets and

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looking at strategies to realize

those particular assets thereafter.

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The directors then tend to

have a very small role with.

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The liquidation moving forward, and

you know, quite often I get comments

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from directors saying, for the last

six months I've been fielding calls

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and avoiding calls from creditors.

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But as soon as you got appointed,

Darren, the phone call stopped.

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So, you know, there's been a

weight lifted off my shoulders.

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You know, I'm no longer in fear

of the phone ringing because some

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directors leave it that long where.

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They become anxious.

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That really stops them from living

by virtue of what's going on.

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So quite often, a lot of the directors

then get that little bit of breathing

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space, then just sit back and take time,

work out what's going on, and work out

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what their life is gonna be like beyond

the business that they've spent their

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entire life or the, at least the last

sort of decade, working on an end.

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Anthony Perl: Yeah.

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And I imagine that's huge, right?

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That huge sense of relief.

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But is it a bit of a calm

before the storm again?

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Darren Vardy: Generally there's no more

storm, and this is where the sort of

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clarity starts to come in, is that, you

know, once we get appointed, once we

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get through that period and work out

what the position is, we can then go

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back to the directors and stakeholders

and say, well look, this is the reality

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of what we are faced and this is what

the likely outcome is going to be.

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Now that may or may not have a

personal financial impact on the

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directors, and if it doesn't.

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Well, then that's probably

a good thing for them.

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If it does, it then gives them the focus

on the issues that they need to deal with

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with clarity as opposed to not knowing.

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And quite often not knowing is one of

the major issues, whereas we can say from

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what we identify, here are your issues

that you're gonna have going forward.

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And it might be you've

got inso trading exposure.

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It might be you've personally

guaranteed some motor vehicle leases.

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That need to be properly and

appropriately dealt with.

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It might be that you've provided personal

guarantee to a number of creditors,

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so therefore you need to look at your

personal financial position as to how

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you're gonna deal with those personal

guarantees outside of the company.

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Because whilst they're a creditor

of the company, they're also a

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accreditor review personally.

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Quite often providing that clarity

is what the directors need to

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enable them to get on with it and

deal with things and, and move on.

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Anthony Perl: One of the things

that you mentioned there is the

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difference between whether there's

a personal liability or not.

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Are there some rules that people should

follow to make sure that they're not gonna

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find themselves in that situation where

they're not gonna be personally liable?

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Or is that just difficult

to avoid at times?

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Darren Vardy: Sure.

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Look, in an ideal world as a director

of a company, you don't wanna sign any

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personal guarantees, whether that be

property leases, motor vehicle leases,

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supply of product from creditors.

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However, in a practical

world, they're unavoidable.

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Every lease for a motor vehicle requires

a personal guarantee, a property lease.

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You may be able to negotiate out of

a personal liability by providing

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a greater security upfront.

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Suppliers they may insist

on you providing a.

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Personal guarantee to

get supply from them.

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So your alternative there is, well, do

I seek other parties to supply that or a

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similar product to my business that won't

require, or do I just make sure that I

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know who my personal guarantees, who I've

provided personal guarantees to, and make

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sure that they're paid every month on

time, every time, so there is no exposure

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if something unforeseen did happen.

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Anthony Perl: Let's get back to

the liquidation process itself,

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Darren, and talk me through then

getting through to the other side.

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What does that look like in most

cases, and perhaps gimme some

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examples one way or the other,

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Darren Vardy: getting through to the other

side, depending on the length of time

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in which it takes to realize a company's

assets, depending on whether or not there

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are any other claims that a liquidator.

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May or may not have against various

parties pursuant to the Corporations Act,

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but generally a liquidation generally

only takes six to nine months to complete.

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Once a liquidator is finished their job,

the companies then do registered by ASIC

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automatically three months thereafter.

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So the whole process in most instances.

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Particularly with small business

matters, and it could all be dealt with

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and wrapped up within a 12 month mark.

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And as I said earlier, other than

the first few weeks after the

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appointment, the directors have very

little to do with the liquidation

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process unless they're assisting

with the asset realization process.

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So from a director's point of view,

within a month after the appointment of

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a liquidator, they're really, you know,

free to, for want of a better term, move

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on and look at what they're going to do.

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With their life going forward to, you

know, earn an income and put food on the

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table, which is sort of what I try to

tell directors, you know, their focus

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is whilst they've gotta be compliant and

respond to all of our queries and provide

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all the information, they also need to

look after the family unit and just get

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back to earning an income in living.

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And the sooner they can do that,

the easier it's going to be on

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everyone, even if they're still

involved in the liquidation process

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going forward to assist a liquidator

in the asset realization process.

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Anthony Perl: And how

difficult is that process?

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Because imagine a lot of people,

this is their business, right?

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That they may not have anything else.

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So how do you actually turn that around?

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Darren Vardy: That's the thing, is that

where there's a liquidation and there's

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no business as a going concern, and my

role is just simply to realize its assets.

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The involvement of the director ceases.

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At the date of my appointment.

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So yes, it's probably may come as a bit of

a shock, but to a degree it comes at a bit

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of a relief because they don't have the

pressures of running the business anymore.

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The creditors making the phone calls,

the constant concern of having enough

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cash to pay the wages week in, week out,

or month in, month out as it may be.

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So quite often you find that

that pressure valve is released.

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And it actually allows the directors

to think clearly or more clearly,

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and then they can focus on, you

know, what is the future gonna be?

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Because they don't need to focus on

anything to do with the business because

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it's no longer under their control.

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Anthony Perl: So when you have that

sort of situation, do you find that

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most of these people very quickly find

some alternative sources of income?

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Are they finding work easily enough?

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Is is it the job?

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Is it another business?

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What's the mainstay?

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Darren Vardy: Yeah, and suggest

that the majority of people that

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I've dealt with go into some form

of PAYG full-time employment.

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They don't want to be business

owners anymore as a result of the

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turmoil that they've encountered.

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And they just want to get back to living

and spending time with the family and

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you know, putting food on the table

and getting back to living for want

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of a better term, because they've

been all consumed by the business.

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Generally in the months, years

leading up to my appointment.

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So quite often we will find that the

directors of the companies will prosper

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personally, mentally from appointing a

liquidator to then put that chapter behind

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them, which enables them to move forward.

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Anthony Perl: And do you get much

opportunity to monitor some of these

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people and how they've done in the past,

and then mostly they stay employed?

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Is that generally the rule versus do

you see them starting businesses again?

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Darren Vardy: We don't generally

monitor the whereabouts of

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directors going forward.

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Quite often I say to these directors,

you know, don't take offense,

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but I only wanna see you once.

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And that's just to do this liquidation.

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Most people, it depends on

their financial position.

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Obviously, if they've got the financial

where we've all personally to go,

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again, the majority of people go back

into some full-time employment, at

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least for a couple of years until

they get their feedback on their

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ground and save up a bit of money.

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But no, there's no real

recording or monitoring of people

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going forward in that regard.

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Anthony Perl: The liquidation

process itself, what does the

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business look like at the end of it?

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What do you see happening?

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And, and indeed, you know those

directors, once you're in and you are,

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and they're focusing on their new life,

do they even care monitor what happens

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at that process and what does the

business look like at the end of it?

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Darren Vardy: Look, the majority

of genuine directors care about

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the outcome because they wanna see

that where possible they maximize

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the return back to their creditors.

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And what I find is that whilst they

don't have an active role, you know, from

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time to time the directors are ring up.

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How's it all going?

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What does a return look like?

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Do you need any assistance with anything?

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But generally, we're there if business

will even get sold as a going concern.

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Or we'll realize the assets as best we

can, and any surplus funds you use to pay

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the cost of the process and then filter

down through the priority of creditors.

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So I think most directors want to know

what the final outcome is because the

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genuine ones care about not leaving anyone

out of pocket or minimizing the loss.

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So yeah, that's sort of my experience with

the people that I've been involved with.

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Anthony Perl: And the businesses

themselves at the end of the day,

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once you finish with the process, is

there one way or the other, do they

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typically end up in the hands of someone

else and realize in a different way?

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Or is it generally just dispersing

the assets and it's kind of,

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that business is no longer.

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Darren Vardy: Majority of the time,

it's the business ceases to trade.

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It's because it's not a type of

business that is of value as a

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going concern, in which case then

it comes just down to an asset sale.

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So I'd say the majority

of time the business.

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We'll cease and the assets will

be sold as opposed to a business

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sale as the gonna concern.

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Anthony Perl: And that's all we

have time for in this episode.

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But next time on IO insolvency options,

we'll explore the three critical questions

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Darren asks Every business owner.

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When they're seeking help,

Darren will reveal why.

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Understanding why you are here is

more complex than it seems what your

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ideal outcome should be and how to

create a realistic plan to get there.

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It's a masterclass in strategic

thinking for struggling businesses.

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For details on how to get in touch

with Darren and his team on insolvency

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challenges, please consult the show notes.

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This podcast is produced by my

team at podcast done for you.com

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share their expertise through

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If you found value in today's

episode, please like, comment and

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Until next time, remember, there's always

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