Liquidation

Question 1

What is liquidation?

Answer 1

When a company is placed into liquidation, it means selling of company assets and distributing the proceeds amongst the company’s creditors and in funds left amongst its shareholders.

Question 2

Liquidation is the corporate terms for what?

Answer 2

Bankruptcy

Question 3

Liquidator by a company means?

Answer 3

A liquidator may be appointed by a special resolution of the company’s shareholders or more rarely by the company’s board upon the occurrence of an event specified in the company’s constitution.

Question 4

3 Ways a liquidator may be appointed…

Answer 4

• The shareholders may appoint a liquidator by special resolution. The board of directors may appoint a liquidator if an event specified in the company’s constitution occurs.
• A liquidator can be appointed by the high court on the grounds that the company is unable to pay its debts
• A liquidator can also be appointed over a company that is voluntary administration by a resolution of the company’s creditors at the watershed meeting.

Question 5

liquidator notifies the companies office

Question 6

Liquidator takes control of and secures all company assets

Question 7

Trading usually ceases and the business closes, but sometimes the liquidator will trade the business so the business can be sold

Question 8

Liquidator may call meetings of creditors

Question 9

Directors remain in office but their powers are limited. they must provide information to the liquidator and assist them to locate the business records and assets

Question 10

Liquidator investigates the company affairs to establish the case or its failure.

Question 11

Liquidator decides if the business should continue. if not the employees employment will be brought to an end

Question 12

if you have lost your job, you can file a claim in the liquidation if you are owed any salary, wages, holiday pay or redundancy.

Question 13

Employees claims may be preferential, which means they are paid out before unsecured creditors if funds are available.

Question 14

Creditors can only commence or continue legal action if the liquidator or court allow it

Question 15

Secured creditors may deal with secured assets or possibly appoint a receiver

Question 16

Liquidator prepares regular reports regarding their activities and outcomes and files these with the Companies Office for creditors and shareholders

Question 17

Liquidator realises all the companies assets

Question 18

Liquidator may take legal action to recover assets on behalf of the company and creditors

Question 19

Liquidator assesses and calculates creditor claims

Question 20

Liquidator distributes the proceeds to creditors in the order of priority set by the Companies Act

Question 21

on completion the liquidator sends a final report, notifies the Companies Office then the company is removed from the Companies Register