W hat Is Voluntary Liquidation And W hat
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What Is Voluntary Liquidation And What Does It Mean For Your Business? PowerPoint PPT Presentation


There are numerous reasons why a business might fail we don't need to go into each of those. When a business faces financial difficulties there are lots of options available to the directors and shareholders.

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What is voluntary liquidation and what does it mean for your business

W hat Is Voluntary Liquidation And W hat

Does It Mean For Y our Business?

 

Morbid as it sounds, Voluntary liquidation is like euthanasia – when all

attempts to heal the business fails, the board of directors might opt to

voluntarily liquidate (shut down) the business

by appointing a 'administrator' to oversea the

process. They quite literally “pull the plug” on

the business.

There are numerous reasons why a business

might fail we don't need to go into each of those.

When

a

business

faces financial difficulties there are lots of options

available to the directors and shareholders. The easiest options are selected

first and later the more difficult ones. Sometimes these options don't help at

all or reason for continuation of business cease to exist. For example, if the

business is depended on say mining rights for a certain rare mineral and

those rights were either taken away or the mineral was exhausted. There

might be a million other reasons why a business cannot continue ranging

from financial to material supply issues to market related issues. These days

war is an added factor and can spell doom and force a business to opt for

voluntary liquidation.

Whatever the cause, there are two types of liquidation – Corporate

Insolvency Balmain and involuntary. The latter usually happens when the

creditors approach the courts usually due to non-payment of their dues. The

court goes into the merits of the case and appoints a administrator to

investigate and oversea the liquidation process.


What is voluntary liquidation and what does it mean for your business

When the board of directors decide to shut down or liquidate the business,

they hunt for a liquidator (officially called the 'Administrator'). In Australia,

experienced and highly proficient administrators are available with

accounting service providers such DCL Advisory

( http://www.voluntaryadministrationexperts.com.au. ).

When an experienced and highly proficient administrator is found he is

officially appointed (via a board resolution), as the administrator.

In lay terms, the administrator usually begins by investigating the reasons

for the business failure and if he finds that there were financial or other

irregularities, he is duty bound to inform the authorities. In either case, he

proceeds to stage two which is to evaluate the assets available for disposal

and also debtors. Once those are catalogued along with their current market

value, he will catalogue all employees and their dues and also all secured

creditors and amounts due to them.

Stage three is when he weighs-in whatever resources are available against

what needs to paid out. If

there is a short-fall, he

will call a meeting and

try

and

agreement from those

who are due to be paid,

obtain

an

to accept a reduced amount in full settlement of their dues.

Stage four is usually the sale all assets at best prices available and also


What is voluntary liquidation and what does it mean for your business

attempt recovery of monies owed to the business by the debtors. Stage five is

the distribution process and stage six is the final dissolution of the business.

Of course, except for the final dissolution which happens only at the end, all

these other steps need not be in the same sequence and the administrator is

free to choose how he goes about the process and may even opt to combine

one or more steps or run several of them simultaneously.

Broadly however, Business Insolvency Sydney is an investigation into the

reason for the failure followed by selling of the assets owned by the company,

followed by distribution of the proceeds of the sale and then the final legal

dissolution of the company.

 

 

 


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