Protecting assets is no longer a consideration for only certain businesses. The fact is that all business owners are negligent unless they have carefully considered and water tight asset protection measures in place. Here OBT looks back at how doing just that saved one business when staff relations became difficult.
Our client owned a successful farming operation and had, of course, taken OBT’s advice about protecting assets; the result of which was that business assets were placed into a different entity to that actually carrying on the business. This was a sound enough strategy put in place early, yet this strategy is often overlooked by many businesses until it is too late.
As is inevitably the case for many businesses whether or not they have effective asset protection, our client was sued for damages suffered by an aggrieved employee. These days this is a far more common occurrence with easier channels for feedback and greater employee protection as a whole in our workplace. Due to various circumstances, the insurance premiums that the client had been paying for several years came to nothing when the insurance provider refused to pay out on the claim!
By having the assets of the business already protected in a different entity, we collaborated with our client and decided that the best course of action would be to liquidate the ‘trading entity’ – a feasible Plan B in this case – with little financial loss suffered by our client.