LIQUIDATION PROCESS IN A NUTSHELL
Any legal entity whose total outstanding liabilities are more than his/her total assets, and the income available is not sufficient to compile a reasonable debt rearrangement payment plan to the creditors, MUST apply for a voluntary sequestration.
Liquidation is a legal process whereby the company and its affairs are placed under control of a liquidator, who must realize the assets and divide them amongst the creditors fairly as stipulated in the Companies Act. The liquidator must make sure that the company is dissolved in an orderly manner.
The new Companies Act. no 71 of 2008 states that if the directors of a company or members of a CC have reasonable grounds to believe that the business is in financial distress, they must either:
1. Place the company/cc under “business rescue”
2. Liquidate the company/cc
3. Supply written notice to all shareholders, creditors, employees and trade unions that the company is in financial difficulty and give reasons why the company is not liquidated or placed under “business rescue”. If the above are not met, it is a criminal offence!
Protect your business by “losing” it!
How long does the liquidation process take?
From date of receiving instruction, it may take anything between 7 days and 4 weeks to get the liquidation in order, depending on which process we use.