Why place a company into liquidation?
There are a many reasons why directors place a company into Liquidation. These reasons include:
- The company is insolvent and is unable to pay all of its debts as and when they fall due.
- The directors wish to avoid the potential of trading whilst insolvent.
- Liquidation process protects creditors’, directors’ and members’ interests.
- 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.
- 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.
- The shareholders want to bring the company to an end and distribute retained earnings and paid up capital of the company.
- The company may be part of a larger group of companies which needs to be restructured.
- To bring to an end the overwhelming stress of continuing to trade