Voluntary And Involuntary Company Liquidation
Company liquidation normally occurs when a company is unable to pay its debts in full and there is no prospect of saving the business through voluntary administration. If a company reaches the point where they are unable to save their business, then the final measure of company liquidation is initiated either voluntarily or involuntarily.
CRS Insolvency Services, the experts in company liquidation, explain the two:
Voluntary Company Liquidation
A Voluntary Company Liquidation is known as a Creditor’s Voluntary Liquidation and is necessary when the business is insolvent and needs to cease trading. The process is commenced by the company’s members and directors passing a resolution to wind up the company and appointing a liquidator. The key difference with a Creditor’s Voluntary Liquidation is that the members and directors can chose the liquidator. Once a liquidator is appointed all of the company’s remaining assets are sold and the funds distributed to the creditors in the order set out by the Corporations Act.
Involuntary Company Liquidation
A creditor who is owed money by a company can initiate an involuntary company liquidation by applying to the court for a winding up order. They will first obtain judgment for the debt from a local or district court, depending on the amount owed or issue a creditors statutory demand. If the application is successful, the court will appoint an official liquidator or a provisional liquidator. The process of involuntary company liquidation can take many months, and it allows for the creditor who initiated the process to choose who will act as the liquidator.
If your company is heading towards voluntary or involuntary company liquidation, you should seek professional advice immediately. Contact the 24/7 CRS Insolvency Services hotline on 1800 210 073 to receive free and impartial company liquidation advice today.