Liquidation involves converting a company’s assets into cash and using these funds to pay off the company’s debts as much as possible.
The liquidation leads to the closing of the business.
There are three different types of settlement:
Voluntary liquidation of creditors is the most common type of liquidation.
In certain cases, a company that has the right to voluntarily liquidate creditors may follow a simplified liquidation procedure. The streamlined process is said to be less expensive due to the reduced survey, reporting, and distribution requirements, but much of the process remains unchanged.
1. The company cannot pay its debts.
The directors of the company resolve to put it into liquidation.
2. A liquidator is appointed.
A liquidator is an ASIC registered auditor. The liquidator must be independent of the company.
3. The liquidator posts a notice on the ASIC website.
This is a public website that anyone can search and search for bankruptcy and company opt-out notices.
4. The creditors are informed of the liquidation.
A report informs the creditors of the settlement and informs them of their rights.
5. Meeting of Board of creditors.
A meeting of creditors can be arranged by the liquidator or at the request of creditors. This meeting may allow the creditors to approve the action plan proposed by the liquidator or to appoint a substitute liquidator.
6. The settlement administration begins.
This generally includes:
ASIC will be notified and the company will be deregistered.