Company Liquidation

Company Liquidation, often misrepresented as business bankruptcy, is a formal way to wind up a registered company. If your company is found to be insolvent, meaning it can’t pay off its debts, the directors and shareholders may decide to start Company Liquidation. Company Liquidation is the process of:

  • Selling all assets the business owns,
  • Paying off creditors, and
  • Dissolving the business.

Long-term financial difficulties, such as irregular BAS lodgements, unpaid tax and employee superannuation are generally the causes business insolvency and the need for Company Liquidation.

The quick and effective strategy of Company Liquidation helps a company’s directors comply with their statutory duties and avoid penalties for insolvent trading.

If your business is experiencing insolvency warning signs, you should act fast to implement a business turnaround strategy, or consult a professional about Voluntary Administration or Company Liquidation.

What Does Company Liquidation Involve?

Once the company has entered Liquidation, unsecured creditors (those without a claim to the company’s assets) cannot instigate or continue legal action unless they have permission from the court. Directors no longer have authority, employees can be terminated and the company’s bank accounts are frozen.

Any trading that continues is at the discretion of the Liquidator and can only resume if the Liquidator believes that continued trading would be in the best interests of the creditors. Any necessary employment can be rehired by the Liquidator.

Company Liquidation ensures assets are distributed among creditors in an orderly way and helps minimise the risk of insolvent trading. It also gives shareholders, creditors, and directors the opportunity to have an independent expert investigate and manage the Liquidation. It is the only way to completely wind up a company and shut it down.

What are the 3 Types of Company Liquidation?

Creditors Voluntary Liquidation (CVL)

CVL is the most common way to wind up an insolvent company and is initiated by a business’ shareholders. The Liquidator’s appointment can be made very quickly, the process is straightforward and it provides the best outcome for your company, its creditors and the directors.

Members Voluntary Liquidation (MVL)

MVL is initiated by a company’s director and shareholders. For your company to be wound up by MVL, a Declaration of Solvency must be agreed upon by the majority of your company’s creditors.

Court Liquidation

Court Liquidation, unlike CVL or MVL, is an involuntary process where a creditor or shareholder apply to the court to commence winding up proceedings of your company. This commonly occurs when a company has not paid an amount demanded under a Statutory Demand.

How Long Does Company Liquidation Last?

The time it takes to complete a Company Liquidation will vary depending on how complicated the company’s affairs are. There is no set time limit with which the Company Liquidation needs to be completed and as such, it can range from 12 to 18 months (for an average-sized company that is fairly uncomplicated) to longer (if the company’s affairs are complex). The main factors that affect the time-frame of the Liquidation are the structure of the company, its dealings prior to being liquidated and whether it will be necessary to litigate.

What is Involved in the Company Liquidation Process?

The Company Liquidation process varies depending on what type of Liquidation your company is placed into. The appointed Liquidator, however, will conduct a similar process for all types of Liquidation which includes:

  • Lodging various appointment documents at the Australian Securities and Investments Comission (ASIC),
  • Communicating the Liquidation to various Government orgnaisations such as the Australian Taxation Office (ATO),
  • Requesting the books and records of the company,
  • preparing a Creditors Report and holding Creditors’ Meetings,
  • Paying necessary dividends to creditors, and
  • Finalising the Liquidation by preparing a Final Report for Creditors, lodging documents with ASIC and requesting that ASIC deregister the company.

What is Involved in the Company Liquidation Process?

The Company Liquidation process varies depending on what type of Liquidation your company is placed into. The appointed Liquidator, however, will conduct a similar process for all types of Liquidation which includes:

  • Lodging various appointment documents at the Australian Securities and Investments Comission (ASIC),
  • Communicating the Liquidation to various Government orgnaisations such as the Australian Taxation Office (ATO),
  • Requesting the books and records of the company,
  • preparing a Creditors Report and holding Creditors’ Meetings,
  • Paying necessary dividends to creditors, and
  • Finalising the Liquidation by preparing a Final Report for Creditors, lodging documents with ASIC and requesting that ASIC deregister the company.

How Much Does it Cost to Liquidate a Company?

The cost of Company Liquidation varies as each business is different. The cost will depend on the total debt of the company, its size and if the company has any assets of value. We, however, offer one of the lowest cost Liquidation services in Australia.

Company Liquidation Experts

If your business is experiencing severe financial hardship, it’s best to act fast to avoid insolvent trading and personal liability. Get in touch with our experienced team today to quickly liquidate your company so you can start over and take back financial control.

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Tax Debt Resolved is a specialist Advisory Firm working with both Companies, Sole Traders and Business Owners facing financial distress usually instigated by the ATO.

With over 40 years of combined experience working in Finance, Tax and the Debt Resolution Industry our team consists of Business Consultants, Legal Professionals and Accountants.

As such we are in a unique position to help guide and assist you in achieving the best possible outcome for both you and your Business.

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