How long the liquidation of a company takes will depend on how the company is liquidated (CIPC or High Court), what the assets and liabilities are and how creditors behave. This article will explain more about the timeline of a liquidation.
We can assist you to liquidate your company within one week. The most important date for a liquidation is WHEN the company is liquidated as that is the moment that creditors cannot take any legal action against the company any longer.
CIPC Liquidation
If a company chooses to liquidate voluntarily at CIPC, it typically takes around one week to complete the process.
If the company is voluntarily liquidated at CIPC, Section 352 of the Companies Act, Act 61 of 1973 states that the liquidation starts when the special resolution is signed by the directors and shareholders that the company will be liquidated is registered by CIPC.
High Court Liquidation
If a company is liquidated at the High Court either on a voluntary or compulsory liquidation, the liquidation starts when the application is filed at the court (Section 348 of the Companies Act, Act 61 of 1973).
Timeline after liquidation
Once a company is liquidated, the Master must appoint a liquidator. In Cape Town a liquidator is typically appointed about one month after liquidation. Other jurisdictions can take longer.
Timeline of the Master to call the first meeting
The first meeting held by the Master should take place about 6 – 8 weeks after the company is liquidated. The first meeting is advertised in the Government Gazette by the Master.
The purpose of the meeting is for creditors to prove claims.
Timeline after a liquidator is appointed
Once the liquidator is appointed, the latter must hold a second meeting with creditors to give them a further opportunity to prove claims (in case they missed the first meeting).
The Liquidator's timeline
The liquidator must sell assets (if there are any) and pay creditors with the proceeds (if any) and investigate the affairs of the company .
Usually this process can take 6 months to 2 years, depending on what transpires, what type of assets the company owns, whether there are enquiries to be held or other investigations requred.
Once the liquidator has completed the work, he will submit a liquidation and distribution account which will show the Master what transpired in the company – the proceeds of assets sold, the costs deducted and how the balance (if any) was distributed to creditors. The Master must approve this Liquidation and Distribution Account. The Master’s offices differ in efficiency so the time for this varies.
Liquidation and Distribution Account timeline
In terms of Section 403(1) of the Companies Act 61 of 1973, the liquidator shall lodge with the Master a liquidation and distribution account wihtin six months after his appointment. This liquidation and distribution account shall reflect the liquidator’s account of his receipts and payments and a plan of distribution or, if there is a liability
among creditors and contributories to contribute towards the costs of the winding-up, a plan of contribution
apportioning their liability.
Section If the liquidation and distribution acc is not a final account, the liquidator must from time to
time and as the Master may direct, but at least once in every period of six months (unless he receives an extension
of time), frame and lodge with the Master a further liquidation and distrubtion account.
Liquidation and Distribution Account to lie for inspection
In terms of Section 406 of the Companies Act, 61 of 1973, the liquidation and distribution account, once lodged with the Master, shall lie open for
inspection for such period, not being less than fourteen days, as the Master may determine.
Master to approve the L&D account
According to Section 408 of the Companies Act 61 of 1973, the Master must confirm the liquidation and distribution account. If the account has been open for inspection and no objections have been made, or objections have been made and amended according to the Master’s direction, and no court application has been made within the prescribed time, the Master’s confirmation will be final. The confirmation will only be challenged by court application from permitted persons.
Liquidation process finalised
Although the date of liquidation is the most important date for the directors because from this date no creditors may take any legal action against the company, the actual liquidation process is finalised once the liquidation and distribution account was confirmed by the Master.