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Liquidation Of Company

When Liquidation Of Company assets may be the best course of action for your Business

There are several reasons why businesses find themselves in financial difficulty. It can be from poor cash flow resulting from adverse economic conditions, unfavourable legal action being taken against the company, ATO debt issues, or unpaid creditors.

liquidation advisory centre | liquidation of companyRegardless of the matter, there are several options available to deal with your debt concerns. However, sometimes these solutions include winding down your business by going into voluntary administration or liquidating company assets.

At the Liquidation Advisory Centre, we have the experience to guide you through these processes and take the burden off your shoulders!

We encourage you to call us at 1300 887 210 for a complimentary, no obligation chat to discuss the right solution for your specific situation.

Liquidation Of A Company Explained Simply

Liquidation is the process of winding up and finalising a company’s financial affairs. Under usual circumstances, liquidation of company assets begins because the company cannot pay all of its debts (i.e. it is insolvent). The purpose of liquidation of an insolvent company is to have an independent and suitably qualified person (the liquidator) take control of the company so that its affairs can be wound up in an orderly and fair way for the benefit of all creditors.

What is the difference between voluntary administration and liquidation?

Voluntary administration, via an appointment of an external administrator, usually takes place when there is a possibility of ensuring the continuance of the company’s existence.  This type of formal insolvency process is intended to resolve a company’s financial debt situation as quickly as possible to maximise returns to creditors. However, liquidation is a type of insolvency intended to wind up the company and its affairs. If voluntary administration fails, legally, it requires the winding up of the company.

Is Liquidation the best choice for my company’s debts?

Business debt issues are usually complicated, and there is no one correct answer to deal with all of them. The options available to you and your company will change depending on several factors, including:
  1. Is your company still currently in operation?
  2. What is the business structure (sole trader, partnership, company or trust)?
  3. What are the debt levels that your company is currently facing?
  4. Are there any assets in the business?
  5. How employees are involved in the business?
  6. Does the company have any adverse legal action pending; and
  7. What is the outcome for the company, as well as yourself? What would you like to see?

Liquidation of company assets is the only way to fully wind up the affairs of a business and end its existence. An independent party such as the liquidator undertakes the process and protects the interests of creditors, directors, and members while dismantling the company structure.

How can an insolvent company be wound up?

An insolvent company can either be wound up.
  1. Compulsory by the court, usually when one or more creditors make an application to the courts, or
  2. Voluntarily by resolution of the company directors to end the company’s existence.

What else can I do to clear my company debts?

There are several options available to assist you in clearing your debts. There are also mechanisms to ensure any legal action against your business ceases and that employees get paid their outstanding entitlements through a government scheme even if the company does not have the money to pay them.

Please note that there are only some of the indicators for you or your company to consider in determining whether your company needs to be liquidated and directors will require appropriate advice, from qualified professionals.


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