First identify what the payment represents and whether the company can lawfully make it. A director’s need for money does not establish priority.
Corporate Recovery Partners
01 / 06
A final draw combines several different legal claims
A company owner plans to close and wants to transfer the remaining bank balance to cover unpaid salary and money previously lent to the business. Supplier and tax accounts are still outstanding. The owner calls the transfer a final draw, but salary, loan repayment and a shareholder distribution are different transactions with different questions to resolve.
Separate salary, expenses, loan repayment, dividends and other distributions. Gather employment records, reimbursement evidence, loan entries and any approvals. Ask the accountant to reconcile the amount actually owed.
Do not use a convenient description to disguise the transaction. The payment record should reflect its substance, and missing documentation needs to be disclosed rather than created retrospectively.
List all liabilities, available assets and the costs of closure. Include tax, employee obligations and contingent claims that may not appear in a simple bank reconciliation.
ASIC explains that liquidators investigate relevant payments and transactions. Obtain specific legal and insolvency advice before a director or related party receives funds while creditors remain unpaid.
Even if a balance is genuinely owed, ask whether paying it now is appropriate and what approvals or restrictions apply. The answer cannot be inferred solely from the director’s title or a ledger credit.
If liquidation has begun, refer the claim to the liquidator and follow the required evidence process. Do not continue using company banking authority as though the appointment had not occurred.
Keep the calculation, supporting records and advice with the transaction file. If payment is deferred or treated as a claim, record that accurately in the closure plan.
Prepare a personal budget separately so immediate household pressure is visible without deciding company priorities by emotion. Ask for help with both situations where they interact.
