How do you liquidate your company
Liquidation is the process of closing down a company which cannot pay its debts. As part of the process an independent person (the Liquidator) is appointed to collect/sell the company’s assets and to distribute the funds available to the company’s creditors. But how do you appoint a Liquidator and what happens once you do?
How do you appoint a Liquidator
The first thing you need to do is chose who you want to be the Liquidator of your company. Once you have done this, the proposed Liquidator will send you information about liquidation and documents to liquidate your company.
It is the company’s shareholders which resolve to place it in liquidation. And if all shareholders agree (which is often the case), then shareholders can sign a one page Resolution to liquidate the company and appoint the nominated Liquidator.
If not all shareholders agree, then you will have to convene a meeting of shareholders. At the meeting a special resolution will have to be passed for liquidation, which generally means more than 75% of shares with voting rights at the meeting vote for liquidation.
If for some reason the company cannot be placed in liquidation via a resolution of shareholders, then a director or shareholder can make an application to Court to place the company in liquidation. You will, however, more than likely need to engage lawyers to do this.
What happens when the company is in liquidation
Once the company is in liquidation, you will need to assist the Liquidator with things like, providing records, telling the Liquidator where a company’s assets are and completing two ASIC Forms, which a Liquidator will generally assist you with. There are various other things that may happen in a liquidation and it is best to consult with a registered Liquidator (like those at PEARCE & HEERS) prior to proceeding with liquidation.
What is the cost of liquidation?
If your company has some assets which a Liquidator can sell or collect, there will generally be no up front cost to appoint a Liquidator. If a company has no or limited available assets, then a Liquidator will generally want an amount paid up front to be available to pay their costs. This amount can vary but is commonly in the range of $6,000 to $10,000.
How we can help
If you would like to obtain further general information regarding liquidation you may wish to access our Liquidation FAQ page.