A Brief Account on Company Liquidation Services
Company Liquidation involves putting the company assets on sale through a company’s winding up the process, when the organization is no longer be able to pay its dues. A lot of accounting and advisory firms provide liquidation services to insolvent companies.
Company Liquidation involves putting the company assets on sale through a company’s winding up the process, when the organization is no longer be able to pay its dues. The purpose of liquidating a bankrupt company is to have a suitably qualified and independent person (the liquidator) who can take control of the company so that its affairs can be settled in an orderly and fair way, keeping the benefit of all creditors in mind. A lot of accounting and advisory firms provide liquidation services to insolvent companies.
When should a company consider liquidating its assets?
If the total assets of your company are less than the debts and your business is unable to pay its due bills, then it’s time your company would require an insolvent liquidation. This will involve legally closing the company and the liquidator selling all of your business’s assets to raise money to get the best return possible or pay back your creditors.
Company Liquidation offers some benefits to company Directors which are listed below:
1. Once the Company Liquidation Services is started, the company’s creditors will not ask the Directors for payment and instead deal exclusively with the appointed liquidator. This way, the businessmen will be relived from stress of constant harassment and threats of legal action.
2. Considering liquidation process automatically means unsecured debts are written-off.
3. A Director Penalty Notice (DPN) issued against the company Director will be rescinded if the company is placed into Company Liquidation within 21 days of the date of issue.
4. As soon as the company is closed, all the legal action against the company will halt.
5. Once the liquidation is complete, the Director will be allowed to move on to other prosperous future business ventures.
What are the different types of Company Liquidation?
1. Voluntary Liquidation
Voluntary liquidation can be initiated under the following reasons. Sometimes a company may choose to enter liquidation while it is still solvent and have assets worth more than its liabilities, but believe that the business is not getting any return and will no longer be financially viable. Voluntary liquidation can also happen if the business is insolvent and directors elect to put the business into liquidation.
2. Compulsory Liquidation
A compulsory liquidation occurs when the court asks the company to wind up its operations. This can result in a request from creditors after they have issued the company a statutory demand and the business is unable or unwilling to pay. In this case, a court-appointed receiver is charged with scrutinizing the company’s assets and finding the best way to divide them between creditors.
What does the liquidator do?
Throughout the Company Liquidation, the liquidator’s role is to:
1. Collect and realize the company’s assets.
2. Report to creditors about the company’s affairs, including any uncommercial transactions that may be set aside, any unfair preferences that may be recoverable and any probable claims against the company’s officers.
3. Enquire into the failure of the company as well as any possible offences by people involved with the company.
4. Distribute the money acquired after selling of assets between creditors after payment of the costs of the liquidation.
5. Apply for deregistration of the company once the liquidation is completed.