Resigning as Director Is Not an Escape Hatch
Another common misconception is that resigning as director before liquidation is an escape hatch to avoid liability.
Resigning does not remove liability for past issues, including existing DPNs, future DPNs, personal guarantees, insolvent trading claims or unpaid director loans.
I regularly see someone resign shortly before liquidation under the misconception that it will protect them and leave the remaining director, or a new director, to take the fall.
In some cases, resigning can make things worse. You lose control of the company and the ability to resolve its affairs. This is particularly important if the ATO issues a DPN after you have resigned and the company needs to be placed into liquidation within time.
New incoming directors also need to be careful. A new director can become personally liable for certain existing unpaid PAYG, GST and superannuation liabilities if the company does not take required steps within 30 days of their appointment.
Where insolvency is questionable or a concern, get advice before you resign or accept an appointment.
