9d Voluntary Liquidation Flashcards
What is liquidation?
Formal process of ending the life of a company. Company will remain in existence until the process is completed unlike a partnership.
What are the two types of liquidation?
Voluntary and compulsory
What is voluntary liquidation?
Occurs when members pass a resolution to go into liquidation.
What are the two types of voluntary liquidation?
- A members v liquidation (solvent).
- A creditors v liquidation (insolvent).
What resolution is needed to go into liquidation?
Ordinary - where the period fixed for the duration of the company expires or an even occurs upon which the articles provide that a company should be wound up.
Special - If company is being wound up for another reason.
What is members v liquidation?
Members - still solvent so can pay its debts. Directors provide a statement of solvency which states that the company can pay its debts and any relating interest within the next 12 months and within 5 weeks a resolution to wind up must be passed. It’s a criminal offence to make a false declaration.
What is a creditors v liquidation?
Company is insolvent so creditors must be aware. Directors propose a resolution to wind up which must be passed by >75% majority. Directors provide a statement of affairs (not solvency as company is not solvent). Consent is also required by creditors usually given by deemed consent process.
Who appoints the liquidator and what is their responsibility in a members v liquidation?
Members appoint them and they are responsible for realising assets and distributing proceeds. The liquidator will present their report to a final meeting of the members. They will then inform the registrar of the final meeting and submit a copy of the report. The company will then be dissolved 3 months later.
Once the resolution to wind up has been passed, what must the company do within 14 days?
Advertise this within the Gazette.
