Liquidation
In the case of Members Voluntary Liquidation, if the reason for the existence of the company has, in fact, come to an end then the members may decide to liquidate and close the company. To do this they must be satisfied that the company has sufficient cash, or other assets, to enable it to settle its creditors in full within twelve months. A petition is made to the courts to commence the process. The petition must be accompanied by a Declaration of Solvency by the Directors. This confirms that the company will be able to pay all of its debts. This declaration must be accompanied by a report of an Independent Accountant confirming that the declaration is reasonable. The Shareholders then appoint a liquidator and the assets are disposed of and the creditors are settled.
Creditors Voluntary Liquidation
In this situation the creditors of the company seek to liquidate it with the co-operation of the company. The directors prepare a statement of affairs reflecting the company’s financial position. The liquidator’s appointment is made by the creditors of the company and a Committee of Inspection is formed to assist the liquidator. The liquidator will proceed to make the employees redundant, dispose of the company’s assets and pay what amounts are available to the creditors according to their preferential status. A fair amount of goodwill can be retained between the company and its creditors under this scenario.
Compulsory Liquidation
Here the decision to wind up is forced on the company by an order from the High Court. The petition to compulsorily liquidate the company is usually brough to the court by a creditor. The directors are required, within 21 days of the lodging of the petition, to present a Statement of Affairs to the Court. Once the court has heard the petition it will normally grant the order. It will then appoint a liquidator, usually recommended by the petitioning creditor and the liquidation process will commence. First Recovery has experienced staff to deal with all types of liquidations. In addition we can also:
- Prepare the Reports of Independent Accountants
- Assist in the preparation of Declarations of Solvency
- Assist in the preparation of the Statement of Affairs
The liquidation process can be extremely stressful and can, frequently, result in litigation. This may arise from disputed claims, disputed security or former members of staff claims. Issues may also arise from the Office of the Director of Corporate Enforcement regarding actions of the former directors.
