Navigating the Liquidation Process in South Africa may seem like a daunting task and to many pitfalls to count. But when you have dedicated team of professionals working with you and assisting you in navigating the liquidation process in South Africa, you cannot go wrong.
Can Distressed businesses in South Africa choose to liquidate a company?
Yes, there is several ways of doing this. In South Africa, distressed businesses can choose from three formal processes:
liquidation, insolvency, or bankruptcy. Thanks to Cure Debt you will have no problem navigating the liquidation process in South Africa. We are the best and with good reason. We can help you with specialists on call and that deal with these matters swiftly and professionally. Helping you to start a debt free life.
Company Liquidation yes / no?
The test for placing an organisation under liquidation is straightforward.
• If the company cannot afford to pay the bills when they become due; or
• If it is likely that the company will be unable to make payments towards their obligations within the next six to twelve months, the board of directors may pass a resolution to liquidate the company; or
• An application to the court may be made by the company itself or by a creditor or shareholder of the company.
The Company Is Liquidated, what happens now?
To summarise:
• The business ceases business processes is deregistered, and the entity ceases to exist.
• Directors will no longer have any involvement in the company; and
• Employees will be laid off.
• Company assets are sold to cover the costs of the winding-up process and to reimburse various claimants, including creditors, employees, and shareholders.
Is it possible for a company to still trade once the Liquidation process already commenced in South Africa?
Once an organisation is placed under liquidation, it is obligated to cease trading. Unless it is necessary to continue trading in the best interests of all creditors. Trading may only resume if authorised by the court or the creditors and shareholders. The entity's last day of trading is determined, after which the entity ceases trading.
Assets in the Liquidated Company, what will happen to it?
The company's assets have been frozen, and no disposal of assets is permitted.
Directors and Shareholders hid Assets from the Liquidator, what is the consequences?
Hiding assets is a criminal violation, and anyone who assists in hiding assets from the liquidator risks jailtime.
Creditors and Legal Action – how does it all work?
You also lose the right to sue the bankrupt estate if you are a creditor. Any pending civil processes against the business get put on hold and any judgement and execution orders issued after the commencement of the liquidation proceedings are unenforceable. The creditors are notified and the process of winding up begins.
There’s still money in the business accounts and funds available, after selling the assets. What happens to these funds?
The liquidator will allocate any funds that may be available for distribution after the entity has been wound up and the liquidation and distribution account has been lodged by the liquidators and confirmed by the Master of the High Court. If a creditor is compelled to contribute because the assets were insufficient to satisfy the basic costs of the liquidation, the contribution becomes payable.
The Company's Affairs are finalised – now what?
When the company's affairs have been completely wound up, the Master sends a certificate to the Companies and Intellectual Property Commission (CIPC), alongside an additional copy to the liquidator. The CIPC records the company's dissolution; the entity is deregistered with the CIPC and ceases to exist.
In which Order will Creditors receive Payment in the Event of Business Liquidation?Secured creditors are those who hold security for their claims in one of various kinds. They are the first to be paid.
Preferent Creditors are second in line and are creditors who do not have specific security for their claims but rank higher than concurrent creditors.
Concurrent Creditors are third in line and Compensation for staff is an example of a creditor in this category. Concurrent creditors are paid from any remaining proceeds of unencumbered assets after preferent creditors have been paid in full. Shareholders are concurrent creditors and are paid third in line from any remaining proceeds.
Rid yourself of the financial stress of start living a debt free life again!
Cure Debt offers a seasoned team of insolvency and restructuring experts on staff who will skilfully counsel everyone involved, including directors, shareholders, employees, and creditors, throughout the process. This involves advising creditors on the best strategic choices. With years of experience, our highly trained staff will work hand in hand with you to offer you the best possible outcome and take the stress out of financial distress.
What does the Companies Act say about all of this? Do I have a choice?
As a member of a close corporation or a director of a firm, you have a legal obligation to liquidate your company if you anticipate that you will be unable to pay your company's creditors as they become due in the next six months. Failure to do so is a criminal offence. Please contact us right away for professional advice and support. We can help you Become Debt Free Again.
Why Cure Debt?
Navigating the Liquidation Process in South Africa is a very stressful process if you try to do on your own. But if you have a professional team of insolvency specialists to help you through the process it makes life a lot less stressful