The Rise of Insolvency in the Building Industry – PART 3 OF 3 – Personal Asset Protection & SBR Myths Every Director Should Know

1. The Biggest Asset Protection Myth

   Too many directors still believe the myth:

   “If all the assets are in my partner’s name, I’m safe.” The truth? You’re not. If a company has funded assets in a partner’s name, a liquidator or bankruptcy trustee can still lay claim to them. Especially in the event of a relationship breakdown, these assets are considered part of the marital pool and potentially up for grabs.”
   Liam Bailey, Managing Partner, O’Brien Palmer

    

2. Better Strategies Exist

   Rather than relying on outdated assumptions, it’s essential to speak to qualified advisors about legitimate strategies such as:

• Discretionary trusts
• Self-managed super funds
• Asset structuring with proper legal safeguards

  These tools are far more effective than simply transferring assets into a partner’s name and hoping for the best.

3. The Danger of Personal Guarantees

   In the building and construction space, personal guarantees are often a requirement for securing supply or finance. But many directors don’t realise:

• These guarantees can still be enforceable years after leaving a business if they aren’t formally revoked.
• Suppliers can pursue personal assets aggressively. Some are known to enforce guarantees to the point of bankruptcy.
• If you sign one, ensure it’s clearly documented and have it reviewed by legal advisors.

4. Small Business Restructures (SBR) – A One-Time Opportunity

   SBRs allow viable businesses to restructure their debts and avoid liquidation.
   But here’s what you may not know:

• The ATO is increasingly the sole creditor in SBR arrangements and is currently accepting offers between 20-25 cents in the dollar.
• You only get one shot at an SBR. It’s designed to be a fresh start, not a repeatable escape route.

5. Why ATO Payment Plans Can Be a Hidden Risk

   While repayment plans may buy time, they are also admissions of insolvency. If your business later enters liquidation and the plan wasn’t met, you could be personally liable.

It’s important that you know your numbers and be proactive. The theme across this series is simple… You don’t need to face these challenges alone. But you do need to act early. Putting your head in the sand is the fastest way to lose everything you’ve worked for.

“There are better strategies than panic or denial. Know your business. Protect your future. And if you need a sounding board, reach out. We’re always here to help.”
Liam Bailey, Managing Partner, O’Brien Palmer

Need Help?
If you’re facing financial distress or want to explore your options, contact the team at O’Brien Palmer:

📞 Call us at (61) 2 9232 3322 for a confidential chat.
📩 Email us at: obp1@obp.com.au