Introduction
If a company cannot pay its debt or its liabilities exceed its assets, it is insolvent. In South Africa, LIquidation is a legal process that closes a company down. After Liquidation a Liquidator is appointed. All creditors must take part in the winding-up process that follows and that is managed by the Liquidator.
The purpose of Liquidation is to protect creditors ( so that the company does not continue to incur debt it cannot pay) and to protect assets (if any). It also ensures that creditors are paid in a certain order of preference as opposed to only one creditor for example to attach assets and nobody else gets anything.
Liquidation is a rather excellent tool to arrest the debt problems of a company while it gives the owner the opportunity to start over with a clean slate. Discuss with us how Liquidation can free your business from debt.
How to Liquidate a Company in South Africa
A company can be liquidated either in the High Court or at the Companies Offices. We only do High Court applications if there is conflict between directors or some other problem. If there is only one director or if all directors/shareholders (if more than one) are in agreement of the liquidation, we rather liquidate the company in the Companies Offices. It is faster and cheaper but just as effective as a Court order.
The steps to liquidate a company in South Africa
- Determine that the company cannot pay its debt.
- Consult with experts in liquidations like us and get proper legal advice. Do not speak to people who are not attorneys. Be careful, there are so-called agents who so-called work for attorneys. It is unlawful for attorneys who have agents who tout for or work on their behalf. You are therefore paying double fees to the so-called agents as well as to the attorney. We are attorneys who specialise in liquidations and we do our own work.
- We lodge and your company is liquidated within 3 – 5 days.
- A liquidator is appointed and he will wind up the insolvent estate of the company.
- As soon as the company is liquidated no creditor may take legal action against.
- Determine for how much of the debt you have signed personal surety and discuss it with us as we have solutions for sureties that we can advise you on.
- Decide when you will close the company.
- Decide on whether you need to keep staff and/or assets and discuss with us how to do it.
- Decide on whether you want to continue with the business.
- We will help you restructure if you do so that you can.
The Benefits of Liquidating an Insolvent Company in South Africa
Get almost immediate relief from paying debt
You don’t have to deal with creditors of the company (you still have to deal with sureties)
You can keep assets, but get rid of debt (SARS included)
You can continue to trade
You get your focus and your energy back as you can do better business without being constantly harassed by creditors.
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In conclusion, liquidating an insolvent company in South Africa is an excellent tool to assist any business owner to get rid of a problem company but continue to trade. If you use our services you can be assured that we will assist you in efficiently and effectively. We hold your hand through the process and explain to you what to do step by step.