Liquidation – Creditors’ Voluntary & Court Appointed

Businesses today operate in an increasingly dynamic and competitive environment. Slowing growth patterns, increased competition and an uncertain economic outlook all present threats to performance and viability.

A company may find itself in the position of having no alternative but to wind-up its affairs. Whilst the prospect is unpalatable, it is the right thing to do where a company:

• is insolvent, that is, it can not pay its debts as and when they fall due; and
• it has no prospect of saving the business by using Voluntary Administration.

The liquidation of an insolvent company can be initiated either voluntarily (by the directors and members) or involuntarily (by a creditor).

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.