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There are times when a firm has done all it can to keep afloat and needs to wind up its business - which is when a company voluntary arrangement may be the answer. This process is usually only decided upon once every other possible option - such as trying to sell the company - has been considered and exhausted. It sees the business's shareholders make a formal decision to go into liquidation. There are two kinds of company voluntary arrangement available: members' voluntary liquidation and creditors' voluntary liquidation. With members' voluntary liquidation, the company's shareholders hold a meeting where they decide to enter this process and use the firm's assets to repay all of its debts. This same meeting will also see the appointment of one or more liquidators. Liquidators are the people responsible for taking control of the business's affairs and disposing of its assets after paying the expenses relating to the liquidation. The majority of directors must agree to members' voluntary liquidation and this agreement should be formed no more than five weeks before they pass the resolution to wind up the company. Shareholders should also file the declaration at Companies Registry, along with a list of the organisation's assets and liabilities and a statement indicating that the firm's directors have gone through its financial affairs and decided that all debts and interest can be repaid within 12 months. Meanwhile, creditors' voluntary liquidation takes place when it becomes clear that the company does not have enough assets to repay all of its debts. When this happens, the firm needs to call a meeting of creditors as well as a shareholders' meeting. The creditors can then nominate a liquidator - a decision that overrides that of the shareholders if they have chosen a different person for the job. Members' voluntary liquidation can be turned into creditors' voluntary liquidation if it is later found that there are not enough assets available for the purposes of debt repayments. Companies considering voluntary liquidation may want to take expert advice before they take the plunge. The process can be a costly one and is usually only the most suitable option for businesses in specific circumstances. If you need advice on voluntary liquidation for your company, get in touch with the Business Rescue Service today. We can give you detailed information on this type of company voluntary arrangement and help you come to the right decision.
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