Liquidation is a stressful period for the management, for the company and for the creditors. Whether it is a voluntary liquidation (CVL) or compulsory liquidation.
In fact no director needs to be goaded to liquidate their company before a proper pre-liquidation review is done. This includes a comprehensive planning to be undertaken as well. It is of utmost importance that the director understands and accepts as well as agrees to what would be the outcome of the liquidation.
Therefore, before a liquidator has been appointed, these are the steps that should be taken:
a) Pre-liquidation planning: This is a necessary step before there is a voluntary liquidation being undertaken. A brief and professional review is to be conducted regarding the finances of the firm. The main aim and purpose of this review are fact-finding. This is done with an insolvency expert. During this exercise, there are a number of recommendations which are given which could be explored rather than a creditors voluntary liquidation route.
During the meeting held, the expectations of both the directors as well as the shareholders are explored. Also what is explored is if they want the business to wind up or if they want the business to be rescued.
During this, the company accounts are to be discussed. The charges which are over company assets are discussed too. Finally, the outcomes are evaluated if the company goes through alternative insolvency procedures. Each of these alternative procedures is evaluated to weigh as to which ones are more suitable in the given circumstances.
The alternative procedures which can be applied are:
• Pre-pack liquidation
• Administration which is pre-packed
• Administration and
• The company voluntary arrangement
This review is of utmost importance to ensure that the best outcome for the creditors, as well as the business, is evaluated. These insolvency practitioners either offer the initial review free of cost or they may charge a fee for it. This review can be undertaken either at the place of work or at home or even at some other place.
After this meeting, the shareholder’s agreement of the CVL is to be shown officially during the meeting of the shareholders. Appropriate resolutions are to be passed. The directors usually give 14 days of notice before an extraordinary general meeting is to be held. At the meeting, at least 75% of the voting shareholders should agree to the winding up of the company. They should agree to the Liquidator Balmain which will be appointed as well.
This resolution is then to be filed with the office of the Registrar of Companies within 15 days of the resolution being passed.
The powers which the Liquidator Sydney are limited until the time he or she is officially appointed as a liquidator of the firm.