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?
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.