If your business is struggling with finances and you have tried all options to get it back on the right track, then the last option left for you would be to liquidate your company. This is a hard choice and needs to be made with a sound mind. If you are not sure if this is the right decision, you can always hire insolvency experts to guide you on the right track. 

Overview of the Liquidation Process

Now before you jump the gun and decide to liquate the company, you first need to have a brief idea of what the process is all about. Liquidation means shutting down your business and using up all the assets of the company to pay dues to shareholders or creditors. There is a lot of works that go down in the liquidation process. 

The legal complications, paperwork, and other issues can cause you a lot of stress, leading you to make hasty decisions. If you are looking for a
company liquidation Sydney insolvency expert, here is where companies such as The Insolvency Experts in Gordon, NSW Australia can help you. You can go in for a free consultation with their experts by calling on their customer care number or filling out a form on their website. 

The liquidation process can happen in different ways. You might need to be aware of the different types of liquidation before you decide to go in for one. 

Understanding the Types of Liquidation

Liquidation can be of three types:

  • Compulsory Liquidation
  • Creditors Voluntary Liquidation (CVL)
  • Members Voluntary Liquidation (MVL)

Compulsory Liquidation happens when the court issues a directive to wind up your business. Here:

  • The creditors of your company will give a petition to the court
  • The court will take into account the reason for such a decision 
  • The most common reason for this type of liquidation is when your creditors are sure that your business cannot pay off its debts
  • If the reason is valid and convincing enough, the court will pass the petition

Creditors Voluntary Liquidation is when the directors of your company decide to wind up the business. Here:

  • The directors can appoint their liquidator
  • The process involves meetings with the directors, shareholders, creditors to discuss the current financial position of the company
  • When the decision to dissolve the company is made, the appointed liquidator will handle the matters of the company
  • They will send progress reports to the shareholders and creditors on the liquidation progress

Members Voluntary Liquidation happens when your company can pay off its debts without declaring itself insolvent. Here:

  • A board meeting with the directors will be held
  • A declaration of insolvency will be signed after mutual agreement
  • A written resolution will be sent out to all the shareholders of the company
  • The resolution needs to be passed by at least 75% of the shareholders for the company to get liquidated

Conclusion

When it comes to liquidation, you do not want to take any risks. It is always better to rely on experts for sound financial advice rather than make the wrong move.  

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