Creditors Voluntary Liquidations
When the Directors and shareholders of a company resolve that the company is insolvent and its affairs should be wound up this is called a Creditors Voluntary Liquidation.
Creditors Voluntary Liquidations usually occur due to Business failure and it is a fast effective strategy to deal with a company that can no longer pay its debts. It also assists Directors in complying with their statutory Duties.
Under a Creditors Voluntary Liquidation, a Liquidator is appointed by the company’s shareholders or creditors. Once appointed the Liquidator then secures and realises the company’s assets, undertakes an investigation into the company’s affairs and reports to creditors as well as distributes the proceeds of asset realisation to creditors.
The Liquidator also makes inquiries into the failure of the company and checks for possible offences by people involved with the company and reports to ASIC. The Liquidator will also apply for deregistration of the company once the liquidation has been completed.
If Director Penalty Notices have been issued by the Australian Taxation Office in some cases it may be possible to avoid personal liability by the use of a Creditors Voluntary Liquidation.
For more detailed information on Creditors Voluntary Liquidation please don’t hesitate to contact the team at Chifley Advisory for free confidential advice.