What is the definition of liquidation of a company?
A company or close corporation is liquidated when the company cannot pay its debt or if its liabilities exceed its assets. It effectively closes down the company and it is deregistered with CIPC (companies offices) and SARS. After liquidation, the company cannot be used to trade in any longer. In fact, as soon as the directors sign a resolution that the company will be liquidated, the bank account of the company cannot be used any longer.
This can cause a big problem for business owners who still want to continue with the business. The first question they usually as is “Can I start my business again after liquidation?” The answer is yes.
Liquidation versus Business Rescue
A company is liquidated when a court grants a liquidation order or when the directors liquidate the company at CIPC offices. That is the end of the company. Business rescue means a business rescuer is placed in charge of the business for a maximum period of 6 months to try and rescue the business by making payment arrangements with creditors and also restructuring the business if it is possible. The company does not necessarily come to an end (although in my opinion, 90% of business rescues end up in liquidation) and if the business rescue process is successful, the company continues to trade.
Some business owners need their businesses as it is their only means of any income. Naturally, they would be fearful or it would be impossible to liquidate the company, as they still need to earn an income. The question arises whether the director can start the business again after liquidation and the answer is YES.
How can I start my business again after liquidation?
I cannot discuss details in this article, unfortunately, as each situation is unique. Basically, as a general summary you can start over, you can buy assets back from the liquidator, you can make arrangements with your creditors. There is nothing legally that stops a business owner to have 50 successful companies and 50 more that have been liquidated. The fact that one person has a company that was liquidated, does not prohibit that person from owning a new or similar company. You can also use the name of the company again. We will assist you with the process to be able to proceed with starting your business again after liquidation so that you do not lose your income. If you consult with us, we will dissect your unique situation and advice accordingly. All you need to know in this particular article is that yes, you can start your business again after liquidation.
Consult with us so that we can help you to start your business again after liquidation. Contact Nanika Prinsloo.