Liquidations

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Liquidations

When a company’s liabilities exceed its assets such company is deemed factually insolvent. When a company’s assets exceed its liabilities but such company is unable to pay its debts, such company is deemed commercially insolvent.

WHO CAN APPLY?

• the company (only by court proceedings)
• one or more of its shareholders
• one or more of its creditors
• the business rescue practitioner

VOLUNTARY LIQUIDATIONS:

A member can pass a special resolution to place the company in voluntary liquidation. For voluntary liquidations to be successful, there need to be strict compliance with the time-periods as set out in the Companies Act, 2008.

COMPULSORY LIQUIDATIONS:

A person mentioned above can apply to the court to have a company be placed in liquidation. Liquidation applications can be launched based on a variety of grounds.

THE PROCESS:

The Master appoints a liquidator(s) who is tasked with the winding-up of a company (sell company assets and distributes the proceeds between different categories of creditors)