Understanding Business Liquidation
If your company is unable to be saved by Voluntary Administration, then it will go into Liquidation. Liquidation is the process of winding-up a company to bring its affairs to a definitive end.
Conducted under the Corporations Act, Liquidation typically results in the appointed Liquidator collecting and dealing with a company’s assets, and, if possible, distribute any released funds to creditors and then shareholders. Liquidation is often chosen by directors, both to protect them from insolvent trading laws and to bring the company to an end.
The Liquidator is required to follow a strict time frame and once the company is placed into liquidation, the Liquidator will notify creditors.
Business Liquidation should be seen as a last resort.
The type of liquidation simply depends on your circumstances
There’s three different types of Liquidation for a business – it all depends on who initiates it
and what position your company is in at the time:
Creditors Voluntary Liquidation
A Creditors Voluntary Liquidation (CVL) is the solution to choose when the company is insolvent and is no longer viable. It’s simply agreed to by the Directors and Shareholders, with a Registered Liquidator being appointed to handle the affairs.
Members Voluntary Liquidation
A Members Voluntary Liquidations (MVL) is where a company is trading solvent but the Directors and Shareholders wish to wind up the affairs of the company and deregister it. This is often the case in situations where the future might not be viable for the business; taking the smart option to wind it up before trouble hits.
A Provisional Liquidation is where a Court has appointed a Liquidator to manage the affairs of a company if it’s believed that the assets of the company may be at risk of loss or being taken in some form. It’s not a permanent solution, just a safe one should a disagreement arise between directors.
We’ll help you liquidate and step out of the mess
Sometimes, no matter how hard you try to make it work, your business can fail and you may owe creditors substantial amounts of money that the business has no foreseeable way of paying. If your company is in a poor financial position, and all other avenues have been explored, then Liquidation may be the best option.
Depending on your situation, this will determine which type of Liquidation the Liquidator will choose.
At Australian Debt Solvers, we can take care of this process for you with care and understanding. Businesses fail every day, and they can do so through no fault of the directors. A poor period in sales or an unforeseen event can tip the balance and result in insolvency. Liquidation allows you to move on and focus on the next venture.
Think Australian Debt Solvers Can Help You liquidate?
Help for a Distraught Director and Accountant
Australian Debt Solvers were extremely competent and spent a great deal of time answering our questions. Everything was set out clearly and in a helpful manner with easy to understand instructions. Advice was given with the greatest consideration. I would strongly recommend them to anyone who needs help with company liquidation.
They answered every question we asked within a very short space of time. Nothing was too much trouble and they were very understanding – knowing how hard it is for a business to come to this decision.
I have told other Accountants about the great service they provide.
Keeping a profitable business, after the Court had appointed a Liquidator
We spoke to ADS after our company had already been wound up by the courts. We wanted the assets from the liquidated business, but didn’t know how to get them. We called Debt Solvers and they took care of everything….they got an “Authority to Act” from us, spoke to Deloittes who were the Liquidator, negotiated the sale of the assets, set up a new company for us…….and we are now going from strength to strength. Money was well spent with ADS!
Gary & Jo, UFIF Engineering
Turning around a company that owed too much to the Tax Office
Our company is a Medical recruitment agency with mostly Government based clients. We had a good sales forecast……but were heavily weighed down with debt, mostly from the ATO. I met with Debt Solvers….when I thought I was going to lose the business. They talked me through Voluntary Administration where you offer creditors a reduced amount, and you pay the reduced debt over 12 months – which is called a Deed of Company Arrangement. Our creditors agreed on the offer, and we have gone from strength to strength. ADS even organised a Debtor Finance company to assist with our cashflow at a reasonable rate. Considering I thought we were going to lose the business – an great result!
Shaun, Beat Medical
We’ve helped thousands of Australian Business Directors with the Lowest Price Liquidations in Australia!
Australian Debt Solvers takes up to 10 enquiries per day from Australian Companies that have debt issues. A lot of these have under $100,000 of unsecured debt, with no company assets, and simply need to close the company down. Debt Solvers does this for a fair price, efficiently and with empathy for the Director. It’s a service that has proven extremely useful for Directors, right across Australia.
A low cost Voluntary Administration service to get companies back on their feet
Australian Debt Solvers hears from a lot of Directors, where there company could be profitable and trading well, but they are being tied down by too much debt – of which the majority is usually the ATO. We have worked through with hundreds of companies – a Voluntary Administration – where we negotiate and reduced amount of debt to creditors over usually a 12-24 month period. This is called a Deed of Company Arrangement….and is an extremely effective method of assisting companies to “get back on their feet”. Debt Solvers charges a fair price through this process…….and it’s great to see a business go from strength to strength after this service.
Blows competition out of the water
Firstly Dave showed compassion when the other liquidator was very impersonal. Secondly Australian Debt Solvers are helpful – there was stuff Dave didn’t have to tell me as he is just dealing with our company not our personal affairs. However he answered all my questions which makes it easier and gives me a lot more confidence that we are not breaching rules as we wind down. Thirdly, the fee is so much cheaper than a traditional insolvency practice. So far I am very impressed with Australian Debt Solvers. I will post another review once we have completed the process.
Thousands of businesses have turned to us for help
If it is decided that liquidation is the best course of action, Australian Debt Solvers is here to ensure the Liquidation process is managed efficiently, quickly and affordably.
Unlike many firms in the industry, Australian Debt Solvers offer a full in-house service. This means we have our own in-house Registered Liquidator which allows us to keep your costs down.
For this reason, thousands of businesses throughout Australia turn to us for help. Business Liquidation doesn’t have to cost you tens of thousands of dollars in fees – AND Australian Debt Solvers can Liquidate your ailing company for a considerably lower price than other Liquidators.
At Australian Debt Solvers, we understand that the Liquidation process can be an emotional and stressful experience for you, so we ensure the process runs as smoothly as possible in order for you to move on with your life.
For a FREE consultation, simply enter
Business Liquidation FAQs
What is Liquidation?
Business Liquidation is the process of wrapping up a company and finalising its affairs. A Liquidation is conducted through the Corporations Act and typically involves the collecting of assets, commencement of investigations, and distribution of funds to secured creditors, unsecured creditors and then shareholders.
There are four main types of Business Liquidation:
- Creditors Voluntary Liquidation — this is the most common type of Liquidation, and is one that directors and shareholders opt for to voluntarily appoint a Liquidator to an insolvent company.
- Members Voluntary Liquidation — this is used to voluntarily finish the business matters of the company.
- Provisional Liquidation — this allows for an independent third party to take control of the company while an issue is being sorted out; or to protect the assets while an Administrator is being appointed.
Once a Liquidator is appointed, they are required to follow a strict time frame and once the company is placed into Liquidation, the Liquidator will notify creditors.
This notification is made public and will be listed on the Australian Securities & Investments Commission (ASIC) website, meaning that the company’s suppliers will also know that they are going into Liquidation.
Business Liquidation should be seen as a last resort. For additional information, download our free e-book.
When is a Liquidator appointed?
If a company is unable to pay off its debts to its creditors, and it is unlikely that the company will have the means to in the foreseeable future, then a Liquidator may be appointed to end the business. A Liquidator is typically appointed when all other avenues of recovery for the company have been explored. Liquidation should be seen as a last resort as once the process begins, the company will be terminated.
A director may choose to Liquidate a company for many reasons and, depending on the situation, it may be the best option for all concerned. A director of an insolvent company will be placed under immense stress and will have to cope with pressure from shareholders, creditors, and employees.
Liquidation often helps to protect directors from the punishable act of Insolvent Trading, help to protect a director from personal liability for tax debts, and allow the director to move on by bringing the old business to a close.
What happens to a business in Liquidation?
What happens to a business in Liquidation can differ slightly depending on the type of Liquidation that is commenced.
Once the Liquidator is appointed they will run a process that will include:
- The lodgement of various documents at ASIC
- Advising a variety of government organisations such as the Australian Tax Office and government revenue offices
- Requesting directors to answer questions and deliver the books and records of the company to the Liquidator
- Collecting and selling the company’s assets
- Preparing a ‘Creditors Report’ and hold a meeting with creditors
- Reviewing company files and records and reporting the findings to ASIC
- Potentially commencing recovery processes if hidden assets should be recovered,
- If funds are available, pay a dividend to creditors
- Finalise the liquidation process by preparing a Final Report for Creditors, lodge various documents with ASIC and request that ASIC deregister the company
In a Creditors Voluntary Liquidation or a Members Voluntary Liquidation, appointing a Liquidator is relatively easy. Directors are simply required to sign a resolution document and then a resolution document is to be signed by the shareholders of the business. Next, the company will contact a liquidator such as Australian Debt Solvers. In order to appoint a Liquidator they must provide written consent to act as Liquidator for the company.
What is the difference between Liquidation and Voluntary Administration?
Business Liquidation and Voluntary Administration are two different process with very different potential outcomes. When a company enters into Voluntary Administration, an Administrator is appointed to take control of the company and make key decisions regarding the future of the business.
Voluntary Administration presses the ‘pause’ button on the company and temporarily grants the business a reprieve from creditors. This pause may give the business enough time to sell assets and generate enough money to pay its debts. An Administrator may decide to hand control back to the directors, and the company could well go on to trade at a profit once more.
Liquidation, on the other hand, should be seen as a last resort, and opted for only when all other avenues have been explored. A Liquidation’s sole purpose is to end the company, selling assets, and paying back creditors.
A company going through Liquidation has no chance of surviving and, once the process has begun, the company’s directors generally cannot seek advice from Administrators or get input from the creditors.
OUR KEY CREDENTIALS
- In-house ASIC Registered Liquidators, Administrators and Receivers
- CPA and CA Qualified Accountants
- ARITA (Restructuring & Turnaround Association) memberships in-house
- Over 40 staff
- Offices in Sydney, Melbourne, Perth, Brisbane, Gold Coast, Adelaide, Townsville and Darwin
- One of Australia’s fastest growing insolvency firms
- Dedicated enquiry team with 24/7 service
- National legal network and expertise
- Diverse funding and finance options if required
- Rated 4.9 out of 5 on service review site Trust Pilot