How GEEDUP's liquidation happened after unpaid ATO debt
Anaita explains how GEEDUP entered liquidation after the ATO issued a wind-up order over $2.2 million in owed tax, on top of $16.5 million owed to other creditors, and details how debt restructuring negotiations can sometimes prevent this outcome. She warns founders that bad debt, especially with the ATO, can destroy an otherwise successful business.
The lessons
Be extremely careful with debt, bad debt can kill a business that once looked successful
Don't ignore or delay ATO obligations, they can force liquidation even when creditors might accept a lower settlement
A company can recover from liquidation if it recoups enough money to pay off its debt
Questions people ask
Can a company recover after entering liquidation?
Yes, according to Anaita's research, a company can recover from liquidation if it manages to recoup enough money to pay off its debts. GEEDUP reportedly offered to pay a partial settlement on its ATO debt, but the ATO pushed for liquidation because it believed it could recover more money that way.
Transcript
It's another sad day in Ecom today because GEED up has officially entered liquidation after the a t O. Has secured a wind up order. And what that sounds like is the a t O. Has issued GED up a stat DEC which basically tells them, hey, if you don't pay back the money that you owe us within 21 days, we're gonna shut down your business.
Getting a stat DEC is very scary and very serious matter. And what I can see is they owed 2. 2 million dollars to the tax office. Remember, I think they were about a 20 million dollar company at one point.
So 2. 2 million to the tax office and then $16. 5 million to other creditors. As someone who is doing a lot of research on this sort of stuff, I want to explain this and it says that Jadup told the federal court that there was an offer to pay 18.
76 cents on the dollar for their a t O debt. But sometimes when you're in a really bad place, you can actually go through a business restructuring and negotiate your debts down with unsecured creditors. So that could be like your shopify loans and the a t O. You can negotiate paying cents on the dollar.
It's like they had an offer to pay 18. 76 cents, but a t O. Is saying, well, no, if we wind up your company and you go into liquidation, we can most likely get 25 cents on the dollar. So I Guess the unfortunate thing is that because the a t.
O. Thinks that it can get an extra 7 cents on the dollar for the debt that they are owed, they have forced this liquidation with Cheetah. I looked up can a company recover from liquidation? And the answer is again, yes, it can recover if it can recoup enough money to pay off it debt.
There is a big learning here for business owners, and that is be careful with your debts. Of course, there is good debt and bad debt, but the bad debts can absolutely kill you. And my last lesson of all of this is don't screw with the a t. O.
