Why place a company into liquidation?

There are a many reasons why directors place a company into Liquidation. These reasons include:

  1. The company is insolvent and is unable to pay all of its debts as and when they fall due.
  2. The directors wish to avoid the potential of trading whilst insolvent.
  3. Liquidation process protects creditors’, directors’ and members’ interests.
  4. Allowing a company to simply be struck off ASIC’s corporate register provides no certainty that creditors will not re-register a company and pursue the director in the future.
  5. The director of the company may have been served a Directors’ Penalty Notice by the ATO. If this notice is allowed to expire without appropriate steps being taken, a director may become personally liable for the company’s tax debt.
  6. The shareholders want to bring the company to an end and distribute retained earnings and paid up capital of the company.
  7. The company may be part of a larger group of companies which needs to be restructured.
  8. To bring to an end the overwhelming stress of continuing to trade