What is liquidation?

Facing debt, insolvency or a cash flow crisis, companies are unable to pay their debts as and when they fall due. For a company this can result in liquidation. Insolvency law and its processes are complicated.

Liquidation, voluntary administration, receivership, company insolvency and bankruptcy’ are all the result of a company being unable to pay its debts.

Some terms refer only to company insolvency – liquidation, voluntary administration and receivership, for example. Bankruptcy is what happens to individuals unable to pay debts, not companies.

These ‘concepts’ can be used positively – if you plan and prepare correctly. Rebuild Now can help you through any of these situations. To understand the definition of insolvency and technical terms, refer to our Information Page on ‘What are Liquidators, Administrators and Receivers‘.

Liquidation, put simply, is the ending of a company. Liquidation means the company will no longer exist once the Liquidator goes through a process of checking that all available assets have been identified, collected and realised (sold and converted into money or other value), and distributed to those entitled to the realised funds in order of priority. A good summary of the process is available by searching the ASIC website.

It is important to know that in certain situations liquidation can be used to allow a business to have a fresh start IF the process is planned and prepared for.

To find out how, refer to our Information Page on ‘My company is insolvent – what are my options?‘.

Contact us today to discuss your options. Whatever the outcome, you will be better placed to get on with your future.