Can a business allow employees to use their own software for work as a way to make sure that if the company has to declare bankruptcy and sell all its assets, then it can hide its proprietary software from liquidation? I was thinking of how a company would try to protect its method of making money from being forced to given up if there was a bankruptcy or the courts were trying to seize property and the only way I could think of is if it wasn’t owned by the business in the first place. But I don’t know if there is a law restricting employees using their own software like that for this very reason. Is this possible?

  • Is this proprietary software or commercial software?
    – Dale M
    Dec 16, 2021 at 6:22
  • Proprietary software either given to the employee or directly created by the employee to do their job while still being owned only by the employee. Dec 16, 2021 at 6:33

1 Answer 1


Yes, companies can protect assets from creditors

The ideal corporate structure for a small private business is:

  • An operating company that deals with customers and outsources everything to:
  • A labour-hire company that employs all the staff, and
  • A purchasing company that deals with supplies, and
  • A holding company that owns all the assets.

That way, if anything goes wrong in any of the companies it can be wound up and a new one spun up to replace it.

There are variations on the theme: construction businesses may spin up a new company for each project, mining companies a new one for each mine, property companies a new one for each property holding (usually as a trust) etc.

Providing the contracts between the companies are genuine commercial arrangements and the directors act in the best interests of each of the companies, this is generally legal.

  • Why not go even further: why not put every individual asset in its own company?
    – user253751
    Dec 16, 2021 at 13:53
  • 1
    @user253751 nothing but costs. Each of these structures cost money to set up, lawyer fees, filing fees, taxes, and usually demand their own tax return forms. You can put one asset in each company if it makes sense when the asset value is big enough (i.e. with real estate). Dec 16, 2021 at 18:11

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