The liquidation process is crushing business owners as well as creditors. If you understand the available options and partner with a reliable and good insolvency practitioner the process can get navigated smoothly. Liquidation can be because of financial issues or some other reasons closing a business is not an easy decision.
Insolvency experts can help in lessening the associated stress and worries of voluntary liquidation. Some things to remember before going into liquidation are –
- Consider every option
- Consult a certified insolvency expert
- Get familiar with the process and your responsibilities
Consider every option
Before finalizing dissolution and liquidation ensure that all possible options to handle the current financial issues have exhausted. When you conclude that business liquidation is still an appropriate step, then move on to hire an ASIC certified liquidator.
Consult and hire a certified insolvency practitioner
The insolvency practitioner has to be certified, competent, and experienced to handle the liquidation process from start to finish. The experts will help you understand the necessary steps associated with the liquidation process. They will handle the asset evaluation, realization, prioritized distribution of the funds from asset among the creditors, and remaining funds if any among the shareholders.
Get familiar with the process
Types of liquidation
- Compulsory liquidation – When creditors filed court petition get approved, a company is forced into compulsory liquidation. After liquidation company assets get sold and distributed among your creditors. It is a process that includes lawyers and courts.
- CVL or Creditor’s Voluntary Liquidation – When business shareholders or partners determine that their business is or will not be able to accomplish its financial obligation then a CVL process gets started. A liquidator gets appointed, who needs input from the creditors. Company assets get sold and the funds get distributed among creditors. If any funds are remaining it gets distributed among shareholders.
- MVL or Members Voluntary Liquidation – When a company can pay its debt but 3/4th of the members approve to close the company, it is called MVL. The assets get sold and balance is distributed among shareholders under the supervision of a qualified liquidator.
After the liquidation process gets concluded, the business dissolution process starts. The liquidator lodges a Form 5603 and Form 5011 within the required time duration with the ASIC for company deregistering.
How much time does liquidation take?
Several variables need to be considered. Every liquidation situation differs, so the exact time is hard to determine. The moment you commenced the liquidation process and partnered with a professional insolvency practitioner it can take an average period of 2 to 3 weeks for completion.
After the business liquidation is concluded, remember it is your liability to respond efficiently to the creditors that you took steps in their best interest. To avoid personal liability risks, act promptly, and responsibly. Take professional advice and help from insolvency practitioners for smooth navigation of the process from start to finish.
Contact Insolvency Expert to understand the benefits and risks of company liquidation and dissolution!