COMPANY LIQUIDATION - SOUTH AFRICA - WHAT YOU NEED TO KNOW...
How well do you understand company liquidation? In this post, we will answer some of the most frequently asked questions about company liquidation in South Africa. Visit our liquidation department for further information or fill out the online form for a FREE evaluation.
WHAT HAPPENS WHEN A COMPANY IS LIQUIDATED IN SOUTH AFRICA?
All civil processes against the business entity are stopped, and judgement executions are void if they begin after the liquidation proceedings have commenced. Once the entity has been wound up and the creditors have been paid, the entity is deregistered with CIPC and no longer exists.
THE LIQUIDATION PROCESS AND WHAT IT ENTIALS?
The last trading day has been determined. From that point forward, the entity no longer operates. The creditors are notified, and the process of winding up kicks off, during which the assets are sold, and earnings are allocated to the creditors. Once completed, the company is deregistered with the Companies and Intellectual Property Commission (CIPC) and ceases to exist.
WHAT IS THE DURATION OF THE PROCESS?
The duration is determined by the complexity of the firm's asset structure, debts, size, and other factors. It can take anywhere from six months to two years, and often even longer, to complete all of the essential processes.
IS IT POSSIBLE TO RESTORE A COMPANY TO ITS PREVIOUS LEGAL STATUS AFTER LIQUIDATION?
Yes, providing it is soluble and the proper processes for deregistration at
CIPC were followed.
WHEN DO SHAREHOLDERS GET PAID IF A COMPANY GOES BANKRUPT?
The payments are made first to secured creditors. The employees are among the unsecured creditors who must be paid. If there are any remaining proceeds, shareholders are paid third in line.
IS IT POSSIBLE FOR A DIRECTOR OF A LIQUIDATED BUSINESS TO START A NEW ONE WITH THE SAME NAME AFTER THE LIQUIDATION?
Yes, as there are no rules against it, as long as the director informs the creditors, and they are aware of the new corporate entity.
DO THE OWNERS DETERMINE WHO RECEIVES PAYMENT WHEN A BUSINESS IS LIQUIDATED?
No, they have no involvement in the matter. A liquidator is appointed once the firm starts the process. This liquidator evaluates the debts and, following the principle of secured creditors first, distributes the proceeds of asset sales in the specified order.
CAN A COMPANY BE LIQUIDATED EVEN IF IT HAS NO ASSETS?
Yes. According to the Company Act, a company must cease operations if its liabilities exceed its assets and it is unable to pay its expenses, regardless of whether the company has assets or not.
WHAT HAPPENS IF NO MONEY IS LEFT AFTER THE SECURED CREDITORS ARE PAID?
Unsecured creditors and shareholders receive only a portion of their money or none at all.
ARE THE DIRECTORS LIABLE FOR THE COMPANY'S DEBT?
No, unless they have signed surety in their personal capacity for the business's debt. Personal guarantees are sometimes signed by directors to purchase much-needed equipment or other forms of assets for the firm. In these cases, they become liable for the firm's debt and can sequestrate if they are unable to fulfil their obligations.
WHERE CAN YOU FIND OUT MORE ABOUT COMPANY LIQUIDATION?
Cure Debts' liquidation experts will share with you everything you need to know about business liquidation. Seek advice to help your company liquidate.
WHERE CAN I FIND AN EXPERT TO PROVIDE ME WITH ADVICE ON DECLARING MY BUSINESS BANKRUPT? After reading this, I am very uncertain and don’t know how to choose a service provider, now what?
Choose a service provider that is a Debt Relief Specialist that will be able to furnish you with a FREE evaluation and FREE consultation and that specialise in all forms of Debt Relief not just one. That way you will get a honest answer to which remedy will be the best for your financial situation.
