Question an adviser who promises to leave every debt behind

A reassuring promise needs scrutiny

When a company is failing, an offer to move everything into a fresh business can sound like relief. Ask what the proposal actually requires before signing or transferring anything. Who buys the assets, what do they pay and who receives the money? A vague assurance that the adviser handles this all the time does not answer those questions.

Keep the written proposal

Imagine a civil contractor approached by someone offering a new company, a new director and continued use of the same machines for one fee. Request the full written scope, identity of each proposed professional and explanation of the transaction. Preserve the messages. Do not let the urgency of paying wages substitute for understanding what is being proposed.

Recognise the regulator's warning

ASIC warns directors about dishonest advisers offering restructures that let a business continue without its debts. Its phoenix guidance explains the harm caused when assets are shifted without proper value and creditors are left behind. The warning is a reason to obtain independent scrutiny, not to assume every business restart is unlawful.

Source: ASIC: Phoenix activity

Choose independent advice

Speak to a suitably qualified lawyer or insolvency practitioner who can assess the proposal independently. Disclose the full arrangement, including side agreements and proposed payments. Ask about the old company's creditors, director obligations and authority over assets. Advice limited to registering a company will not resolve the consequences of transferring an existing business into it.

Examine who stays in control

If a relative or acquaintance is proposed as director, ask why and ensure the arrangement receives proper legal review. Do not assume a different name on the register removes responsibility for decisions. In the civil contractor example, the questions include who controls work, machinery and money, not merely who signs the registration documents.

Pause unexplained steps

If a material part of the proposal cannot be explained clearly, do not carry out that step while waiting for proper advice. Continue cooperating with any appointed liquidator and preserve company records. A workable future requires lawful arrangements and a credible operating plan. It should not depend on secrecy about where the old company's assets and business went.