Company Bankruptcy? One Option To Get Rid Of Debt

Bankruptcy is something that individuals can opt for. Companies and businesses normally go into administration or liquidation. There are a number of different ways that a company can be liquidated.

Voluntary liquidation is one option open to companies that have realised that they are insolvent and will not be able to repay all their debt. If this is the case then the members of the company will have to draft a special resolution. In this resolution they will appoint a liquidator and agree that the company be placed in liquidation.

Once a liquidator has been appointed they are allowed a specified number of days to convene a meeting with all the company’s creditors. There are certain ways that this needs to be done. One of them is by direct communication with the creditor. Another way of communication is through an advertisement in the daily paper of every state that the company has done business in.

When communicating directly with the creditors, a Statement of Affairs will need to be presented. This statement will list all of the company’s assets and liabilities. Along with this will be a list of all the creditors, their address and the amount owed to them.

Another method of company bankruptcy is through an official or Court appointed liquidation. This method is initiated by a creditor of the company and will end with an official liquidation of the company. This kind of liquidation is imposed by either the Supreme Court or the Federal Court. The official liquidator is also appointed by the presiding court. Once the action has been placed on official record, the company’s directors or members will not have the option of appointing a liquidator. They will also not be able to voluntarily wind up the business.

Another form of liquidation is provisional liquidation and this can be applied for by a director or a creditor. Normally, a company will be placed in provisional liquidation by the Court if the members are in dispute or there is the possibility that the assets of the company are going to be misused. If it is shown that the company is already insolvent, the Court will end the status of provisional liquidation and will appoint an official liquidator. The status of the company will be amended to that of official liquidation.

Provisional liquidation can be a difficult and expensive option to choose. Legal assistance is required in order to draft all the documents needed. The legal counsel will also have to prove to the Court that there is an urgent requirement for the application. They will also have to show that there is a high risk of the assets being squandered.

A detailed knowledge and understanding of relevant corporate law is needed when dealing with company bankruptcy or liquidation. This is why you should consult a professional when you find yourself in this position.

If your company needs financial help, make sure you