Key Benefits of Liquidation

• Directors do not have to deal with creditors anymore.
• Quickly eliminate business debt.
• You are not blacklisted for company debt.
• Freedom to start or own new companies.
• SARS may not take legal action against the company.
• Halt to creditor legal actions.
• Continue to trade, no need to stop.
• The liquidator talks to creditors, not to you.
• No more worry and fear.
• It is possible to keep assets after liquidation.
• The liquidation process helps you protect cash flow.
• Stops harassment by creditors.
• Relief from stress and sleepless nights.
• Only takes 3 to 5 days to liquidate.
• Affordable compared to expensive court cases.
• Step away from employee pay disputes.

How Does Liquidation Work?

• Make The Decision. Once you instruct your representative, they draft documentation, you sign it, and they lodge it. Liquidation in 3 to 5 days stops all legal action.
• A Professional Lodge the Documentation.  Documents are lodged with the CIPC and the Master; a liquidator is appointed within about a month.
• The Liquidator. Appointed by the Master to wind up affairs (creditors, bank account, assets). A company does not need assets to liquidate. The Liquidator deals with creditors.
• Creditors Must Stop. No creditor (not even SARS) may proceed with legal action once the company is liquidated.

Steps 1–4 to Liquidate

1. Complete a questionnaire and provide certified copies of IDs.
2. A professional drafts the documentation (often same day).
3. Sign the documents (assistance via video or call).
4. Lodge with CIPC and courier originals. The company is then liquidated.

Why use a Vetted Professional?

• They Work Fast – act speedily to reduce your stress.
• They Give Clarity – provide information so that you understand.
• They Simplify – handle complexity so you manage more easily.
• They Empower – show you how to regain control.

Frequently Asked Questions

When should a company or close corporation be liquidated?

A company should consider liquidation when it is unable to pay its debts or when its liabilities exceed its assets. In such cases, the directors and shareholders can opt for voluntary liquidation. Additionally, a solvent company (one without debt) can also be voluntarily liquidated by its directors and shareholders.

Are directors personally liable for the company’s debt after liquidation?

Directors are not personally liable for the company’s debt unless they have signed personal surety agreements. In the absence of such agreements, the company’s debts are written off upon liquidation, and directors are not blacklisted or prohibited from being directors of other companies.

Can I continue my business after liquidation?

Yes, it is possible to restructure your business after liquidation, allowing it to continue in a different format.

What happens to the company’s debt after liquidation?

Upon liquidation, all company assets (if any exist) are sold. Any proceeds from the sale of the assets are used to pay creditors. Any remaining unpaid debt must be written off, as the company ceases to exist after liquidation, and creditors cannot claim the outstanding amounts from the dissolved entity.

What is the difference between voluntary and compulsory liquidation?

Voluntary liquidation occurs when the directors and shareholders decide to liquidate the company, which can be done through the Companies and Intellectual Property Commission (CIPC) or the High Court. Compulsory liquidation is initiated by a creditor (or a director/shareholder in case of conflict) through a High Court application to have the company liquidated. Compulsory liquidation cannot be processed through CIPC.

What is liquidation?

Liquidation means that a company is voluntarily or compulsorily liquidated, or otherwise described as “winding-up”. A liquidator is appointed to sell assets (if any), pay creditors, and then the company is deregistered.

Can creditors attach the assets of any other businesses that I own?

No. A company is a registered entity that is a legal person. Unless one company signs surety for the debt of another company, the creditors of a liquidated company cannot attach the assets of another company that the director owns.

How is an insolvent company liquidated?

An insolvent company can either be liquidated voluntarily or it can be liquidated by a court order. The liquidation of a company is regulated by the Companies Act of 1973.

What happens to a company or close corporation once it is liquidated?

Once a company is liquidated, it is dissolved.

What are the benefits of the liquidation of a company?

Liquidation can be used to restructure a company, allowing it to eliminate bad debt or other issues. This will enable the company to continue to trade if it wants to, but then be rid of the problem (SARS debt included).

Can I serve as the director of another company after my current company is liquidated?

Yes, you can. There is nothing in our law that prohibits a director from being a director or shareholder of as many companies as is preferred after the liquidation of one (or more) companies.

What happens to directors’ personal assets in a liquidation?

The personal assets of a director are not affected by the liquidation of a company, as the assets are the director’s property, not that of the company. Creditors, therefore, cannot attach the personal assets of directors to satisfy the company’s debt.

What are the effects of liquidation on shareholders in a liquidation?

The shareholders are the owners of a company, and members are the owners of a close corporation. The shareholders and members cannot be held liable for the debt of the company unless they have signed a personal surety for the debt of the company or a close corporation.

Can I sell the assets of my company before liquidation?

You cannot sell company assets that are fully paid before liquidation, but it is possible to buy the assets back from the liquidator after liquidation. Financed assets have different rules that can be explained in a consultation.

What happens to SARS debt in a liquidation?

SARS debt (except for customs and excise taxes) is written off in a liquidation. The company no longer exists, so SARS cannot collect any debt from the company.

Must the financial statements be up to date in a liquidation?

It is not a problem if the financial statements are not up to date.

What is the difference between liquidation and deregistration?

When a company is deregistered, it is only deregistered at the CIPC; however, SARS and other outstanding debts remain active. If there is debt at the time of deregistration, the directors become automatically liable for these debts. If a company is liquidated, it ceases to exist altogether, and its debts are written off.

How long does liquidation take?

A CIPC liquidation takes about one week, after which the company is liquidated. The liquidator’s winding-up process can take anywhere from six months to two years, depending on the company’s circumstances.

Who is a liquidator?

A liquidator is a person who is registered on the national liquidators’ list at the Master of the High Court’s offices and is a person who is qualified to do liquidator’s work.

Who communicates with creditors after liquidation?

The liquidator will communicate with creditors, not the directors.

What is the duty of the liquidator?

A liquidator must wind up the affairs of the company, meaning he must deal with assets, creditors, and monies, and comply with the Insolvency Act.

Frequently Asked Questions: The Liquidator

What is the duty of the liquidator?

A liquidator must wind up the company, which entails, inter alia, dealing with creditors, assets, and monies while reporting to the Master. In other words, he brings the affairs of the liquidated company to an end.

How long does the liquidator’s work take?

A liquidator’s winding up of a liquidated company can take six months or longer, depending on the events that occur in the insolvent estate of the company.

What information will the liquidator want from the directors?

The liquidator will send a questionnaire and request all financial information of the company, including all books and lists of assets. It is not necessary for financial statements to be up to date; he will work with what is available.

Who communicates with creditors after liquidation?

The liquidator is the only one who can communicate with creditors; the directors are not permitted to do so.

Who pays the liquidator’s costs?

The directors are liable to pay the liquidator’s costs.