The Liquidation process is, from an attorney’s perspective, a complicated and technical one.
From a practical perspective, the liquidation process is a fairly simple one.
Making the decision to liquidate
The most difficult part of the liquidation process is for the directors or shareholders of a Company and the members of a Close Corporation to make the decision to liquidate. Lack of knowledge about the advantages of the liquidation process; disinformation; wrong advice from unprofessional people who lately flood the internet purporting to be able to liquidations for only “R5000” whilst not properly advising business owners, all contribute to owners of businesses to delay the liquidation process. The liquidation process shall set you free. It is not a negative experience as most people think. Inconvenient yes, but not necessarily a bad thing. On the contrary, it may be one of the best things for to revive a business that is struggling.
Liquidation Process after the decision was made
Once the decision was made to liquidate the Company or the Close Corporation, the business can set its plans of winding down in motion. We will guide you through the process. We will draft an affidavit that the director/member will sign and then have the documents issued, obtain a case number and a court date. Once issued, the documents will be served on the registered address of the Company/Close Corporation by the Sheriff and on SARS.
The provisional liquidation order as part of the liquidation process
On the date of the provisional application, the advocate will go to court. The directors/shareholders/members do not go to court as the affidavit that was signed by the director/member will be before the court. The advocate will obtain a provisional liquidation order if all is well with the application. If we drafted the documents, we will make sure that there is no reason for a judge to find fault with our application. It does happen though that a judge may have a particular requirement, but it seldom happens and if it happens we can usually fix the problem.
As soon as the provisional liquidation order was granted, the matter is postponed to a second court date referred to as the return date for a final liquidation order.
Service of the provisional liquidation order as a further step in the liquidation process
As soon as the provisional liquidation order was granted by the court, it will be typed and send to the creditors of the entity.
Meaning of a provisional liquidation order
Once a provisional liquidation order is granted, no creditor may take any legal action against the entity and any legal action already taken is suspended.
Last step in the liquidation process: the final liquidation order
If no creditor opposed the provisional liquidation order by the return date, the court will make the provisional liquidation order a final one and the Company or Close Corporation will be liquidated. The court application process is then completed. The second leg of the liquidation process then begins.
Second leg of the liquidation process
Once the liquidation order is granted, the liquidation application process is completed. The liquidator then takes over and he has his own processes to follow.
The liquidation process does not cancel any sureties that directors or members signed
As soon as the entity is liquidated, it is best to make payment arrangements with any creditors of the Close Corporation or the Company that the members/directors signed surety for. If they can’t, it is best to consider their sequestration shortly after the liquidation, otherwise, the liquidation would have been to no avail. It is of no use to liquidate an entity to get rid of the debt but the sureties cause that you must pay back the debt of the business. Therefore, don’t forget to deal with the sureties after the liquidation process.