Before you can liquidate your business, you must first talk with your business’s lawyer and accountant. If the company does have debts but no assets then there is another route that can be used. If your company does have debts. Here are some steps to liquidating a business to help the process go smoothly. It is a common and rather straightforward decision to proceed with the liquidation of your business. Businesses (except for a sole proprietor) liquidates and individuals sequestrate. When you liquidate a business, you don’t just sell your laptop and call it a day. Liquidation implies that the business is not able to pay its debts. Opting for a CVL rather than waiting to be forced into compulsory liquidation will give you, as a director, more control over the whole process, which is important if you have ambitions to buy assets from the liquidator and set up a phoenix company to continue trading the business. You could wait until a creditor forces your company into liquidation, but this presents its own problems in the form of close scrutiny of your actions by the Insolvency Service. So what are the options are you left with? It is the direct conversion of assets to cash by selling them to a user/consumer. Insolvency is the umbrella term for liquidation and sequestration. Liquidation is obligatory when the business can’t pay its debt. The Companies Act, Act 71 of 2008, as well as the Close Corporations Act, Act 69 of 1984, place and obligation on the directors of a Company or the members of a Close Corporation to liquidate the entity as soon as the liabilities exceed the assets. Liquidation further implies that the business will cease to operate (generally as a result of financial problems). Talk to your accountant and lawyer. One can only sequestrate, in terms of the Insolvency Act, if one owns a property (or other big, fully paid assets) or if one has cash. Company dissolution and Members’ Voluntary Liquidation (MVL) aren’t appropriate options because the business needs to be solvent in order to qualify. This process clears any debts and allows for the company to be closed, this is called Administrative Dissolution.It has the same effect as a liquidation but usually costs far less. The court will examine whether there are any alternative solutions which could allow the business to continue trading while also settling the deadlock, such as through a sale of shares, before granting the winding up of the company. Before finally deciding on the liquidation and dissolution of your company, first make sure that you have exhausted all possible options to respond to the serious financial difficulties your business currently faces. The liquidation may come about: as a result of a legal court process, or; by a request of the creditors, or; the company or close corporation may voluntary decide to be liquidated. Liquidating Your Business. So just what is the liquidation option? BUSINESS LIQUIDATION SOUTH AFRICA. Article by listed Attorney: Nanika Prinsloo. 1. 2. This allows the court to decide whether liquidating the business is the best option for the breaking the deadlock that has arisen.

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