Corporate Liquidations
Members voluntary liquidation
Members voluntary liquidation should be used to terminate companies
if:
- There are capital gains tax issues;
- It is necessary to access stamp duty roll-over relief; or
- There may be future liabilities.
The first step in initiating a members voluntary liquidation is
a directors’ meeting to requisition a special general meeting
of members. Next, the company is wound up and a liquidator appointed,
by resolutions of members.
Usually the first actions of the liquidator are in relation to
numerous notifications and statutory lodgments.
Ordinarily the liquidator will wait for clearance from the Australian
Taxation Office before distributing the assets of the company. Clearance
can take a number of months, depending on the complexity of the
company’s taxation affairs.
Once assets are distributed, the liquidator convenes a final meeting
of members. There is no requirement for members to attend this meeting,
and typically they choose not to. The lodgment of a final meeting
return with the ASC triggers an automatic de-registration, at which
time the company ceases to exist.
Prior to putting a company into members voluntary liquidation we
would normally review the company’s financial and tax position
to ensure it is appropriately structured for an easy liquidation.
Due to this review, and statutory notice requirements it is not
possible to place a company into members voluntary liquidation immediately.
So please remember that if you wish to have a company wound up
prior to a specific date – e.g. before 30 June – it
will be necessary to plan to initiate the winding up some weeks
before that time.
Fee arrangements
The fees for members voluntary liquidation and de-registration
will depend on the nature of assets to be distributed, and the complexity
of the company’s taxation affairs.
Our experience is that working with the company’s normal
accountants is the most cost-effective way of dealing with income
tax issues.
A review of the company’s most recent balance sheet will
usually allow us to provide a fixed price fee estimate.
Creditors’ Voluntary Liquidation
If the company is insolvent and has ceased trading, the most efficient
process to bring the affairs of the company to an end is a Creditors’
Voluntary Liquidation.
A director can initiate a Creditors’ Voluntary Liquidation,
but it is the members who appoint the liquidator. At least 7 days
notice of a meeting of creditors must be given to all known creditors
by way of a written notice and an advertisement published in a newspaper
in each state which the company traded. Once the Liquidator is appointed
any remaining assets will be sold and distributed to the creditors.
At CRS we are happy to quote a fixed price for a Creditors’
Voluntary Liquidation in most circumstances.
Court Liquidation
An involuntary liquidation is normally initiated by a creditor
and the appointment of a liquidator is made by an order of the Court.
Normally a creditor who is owed money would first obtain judgement
for the debt from a local or district court, depending upon the
amount owed. Once judgement has been obtained the creditor would
issue a statutory demand. A creditor may then apply to Court for
the winding-up of the debtor company and the Court may appoint an
Official Liquidator or a Provisional Liquidator. This process can
take up to several months and you should obtain legal advice before
commencing any action.
At CRS we are registered to act as Court appointed liquidators.
We would be happy to discuss consenting to act as a liquidator or
provide you with commercial advice if your company is confronted
by a Court action.
Free Consultation
If your company is facing insolvency or if you are considering
pursuing a debtor into liquidation, we at CRS would be happy to
meet with you to discuss your options. Our first consultation is
always free.
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