When a company isn’t able to pay its debts, it can be dangerous. This often leads to the liquidation process. While every company’s situation is different and the liquidation process can look different from one company to the next, there is a similar process that is followed. Many people don’t know what to expect when they are experiencing hardship and facing liquidation. Principle Insolvency is here to talk about the liquidation process and how it all works.
What Liquidation Means for a Company
Anytime a company can’t pay the debts that they owe, they are more than likely going to face liquidation. This is a court order that the company has to follow. When a company is placed in liquidation, they are required to follow and the process will be underway immediately. The company will be closed down and will be removed from the Companies Registrar. A liquidator will also be assigned to help with this process by the court.
What the Role of a Liquidator Is
The liquidator that is assigned to your case will help you with a number of things until the process is complete.
– They will investigate the financial affairs of your company
– They will also be looking for the cause of the failure of your company
– Another thing they will help with is investigating the possible offenses by the director of your company or the company itself
The Power of a Liquidator
There are certain powers that are given to a liquidator. They are able to freeze unsecured assets that will be sold to creditors to help with payoffs, hold creditor’s meetings, and work to repay those creditors. They will contact and deal with many different parties in the liquidation process including:
– Shareholders
– Past & present employees
– Promoters
– RecRivers & accountants
– Solicitors
The Responsibilities of a Director
If you are the director of a company that goes into liquidation, your powers are going to be quite limited. It is your responsibility to cooperate with the liquidator as they take care of the financial and business affairs to ensure they are resolved equitably. It will also be required to provide the liquidator with the records and accounts that are necessary to take care of the liquidation process.
When Liquidation is Complete
There is a summary of reports that must be filed by the liquidator at the end of the liquidation process. They will be the ones that are responsible for giving public notice when the company is removed from the Companies Registrar. There is there a 20 day waiting period after this public notice is filed.
Insolvency Services in Auckland, Hamilton, Levin & New Zealand Wide
If your company is in trouble and facing liquidation, you can turn to Principle Insolvency to help you muddle through. We will be able to guide you through the process and ensure you are well aware of all your options moving forward. Call us today!