Tuesday, September 4, 2012
Business Liquidation - An Analysis
pre pack liquidation will just about do the job. Directors must comply and cooperate with the liquidator all the time and make available the company's financial records and information of all of relevant business affairs. Failure to comply with the actual needs of the liquidator will invoke the offence provisions of the Corporations Act.
What is a liquidation?
A business liquidation is the process of winding up a company's affairs in an orderly manner to ensure it's assets can be distributed fairly to creditors where required and it's structures dismantled. Appropriate investigations would also be carried out to determine if there is any wrong doing that should be targeted. This is in contrast to simply selling a company where the business structure itself remains intact.
Exactly what does a liquidator do?
A liquidator's responsibilities include seeking out, protecting and realising the assets of the business. Investigations into the financial affairs of the company will be carried out in order to reveal any potential illegal or dishonest behavior. When the investigations are complete, reports will be sent to the creditors and to the ASIC. Right after realising the assets and recovering any cash that's owed to the company distributions will be made to creditors and if there's anything left over, to shareholders. Once all of these tasks have been finished the liquidator will apply for de-registration of the business.
Can a company trade while being wound up?
Theoretically, yes, however usually the company will have shut down or have been sold prior to liquidation. The decision to carry on trading is at the discretion of the liquidator who will do this if continued trading will result in an improved outcome for the creditors and members. When trading is continued it may do so for a time determined by the actual liquidator.
How long does the liquidation process last?
There is no set time limit for the liquidation procedure. The actual liquidator will act in the most effective manner possible to recover resources and money, to carry out its investigations and to make distributions as required.
When does the liquidation process finish?
The business liquidation procedure ends once the company is struck off of the companies register by the ASIC, when a court sets aside or stays the winding up procedure or when the company is dissolved by a court order after application by the liquidator.
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