General information on Liquidation in South Africa

Liquidation in South Africa is available to all businesses.  A company that cannot pay its debt should, in terms of the Companies Act, Liquidate as soon as possible.

It is possible to continue to trade after Liquidation.  This means that Liquidation is not the end of the road but a new beginning.   

We will assist you with a Restructuring process that will allow you to get rid of debt while you continue to trade. 

If you worry that Liquidation is going to destroy your business, talk to us so that we can explain how Liquidation will create an opportunity to a new beginning to trade without debt.

When should a company Liquidate?

A business should liquidate as soon as the company cannot pay its debt.  

A company can liquidate at any time, even if there is litigation pending or if there is a SARS compromise busy being negotiated.

The sooner a struggling company liquidates the better.  Liquidation limits damages and gives the business chance to recover sooner without throwing good money after bad.

A business can liquidate even it does not own assets

A company can liquidate without owning any assets.  If there are assets, the liquidator will sell it or the directors can buy it back from the liquidator.  

If the proceeds are sufficient to deliver proceeds, the proceed will be divided amongst creditors in a certain order of preference.  

That which a creditor does not get (shortfalls) must be written off and the creditors cannot claim them from the company.

If there are no assets, the creditors will not get anything and they must write everything off. 

Liquidation gives a fresh start without debt

Trading out of debt does not work – you need a lot of money consistently for a long time and then some.

Business rescue usually ends up in liquidation in any case and is very expensive.

Making payment plans also does not work as you need money to sustain them.

Liquidation solves the problem almost immediately as it gets rid of debt with the added bonus that you can continue to trade.