Voluntary Liquidation Australia is when an insolvent company, or one in danger of becoming insolvent, starts the process by appointing a voluntary liquidator. The company must then stop trading and close down its operations. Next, the assets will be sold off (liquidated), and any debts will be paid with the proceeds from those sales. It’s usually only applied if there are no other options, such as receivership or administration, which can lead to losses for creditors instead of gains for all concerned.
Insolvency Australia is an organization of insolvency practitioners who work together to provide advice, information, and support to voluntary liquidators. Individual voluntary liquidators, insolvency practitioners, law firms, and other organizations may register with us by applying on the website.
Categories of Voluntary Business Liquidation
Voluntary liquidation can be divided into two categories:
1. Liquidation of a company belonging to a group
Voluntary Liquidation Australia of a company belonging to a group involves winding up the shares in the other companies in the same group. That is a complex undertaking that requires the cooperation of all companies in the group. To liquidate shares in other companies in the same group as your own, you must have first been appointed as an Official Receiver in each of those other companies.
2. Liquidation of an individual company.
You can voluntarily liquidate an individual company if an insolvency practitioner has notified creditors (and members) that the business is being wound up. It is usually done by way of a letter that the insolvency practitioner posts in the registered office. The list of creditors and members remains there until all debts are paid, usually taking a few weeks. In this case, an official liquidator would be appointed anyway – unless any creditors object.
How an Official Receiver is Appointed
An official receiver will be appointed under the requirements of the Corporations Act. Here are some of those requirements:
– an official receiver must be a member of a professional association recognized by ASIC. Voluntary liquidators must also have a current license to practice their profession. They must also comply with a Code of Conduct, which sets out ethical and professional standards for them.
– the company being liquidated must be unable to pay its debts. It means that the general meeting of creditors cannot pass a resolution to appoint an official receiver.
– the director or a company member must apply for an official receiver to be appointed. In the case of a public company, at least two directors must make the application.
– there should be at least one general meeting held on or before the date on which notice to creditors is given.
Business liquidation of a company belonging to a group involves three steps:
Step 1 – Making an application for voluntary liquidation.
Step 2 – Appoint an official receiver.
Step 3 – Commencing the final liquidation.
An official receiver will then be appointed to take over the management of the business and appoint a liquidator to hold a meeting of creditors and pay off all debts. At this meeting, all creditors who attended will vote on whether or not they agree to save money by having their debts paid through a distribution. The liquidator will then distribute the funds to creditors according to their preferences.
When a company is placed in business liquidation, the employees will notice something missing: the business is no longer trading. The office and staff will be closed, and sell all assets at a public auction. The liquidator will then complete the final steps of winding up by paying off any remaining debts and residual assets. Those assets would include shares in unlisted companies and property that has been transferred to the receiver through a sale by tender.
Insolvency Australia can help you become an Official Receiver and help you get your company in the right mindset to liquidate your business. Contact us at tel:1300037027, and we can help you in the Voluntary Liquidation Australia of your company.