Company Liquidation

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Company Liquidation is one of New Zealand’s most commonly sought insolvency services.  It comprises the wind-up of a business, realisation of assets to the benefit of stakeholders and deregistration of the company from the New Zealand Companies register.  Company Liquidation involves appointing a registered liquidator to take full control of the company and its assets, in order to satisfy outstanding debt obligations.  During this time, the company’s Directors will cease to hold any powers, but will remain in office and are obligated to assist the liquidator in performing necessary duties.  Upon completion of a Company Liquidation, the company debts will be considered legally fulfilled.

There are two ways in which a liquidator can be appointed in the process of Company Liquidation:

  1. Resolution of Shareholders
    If a resolution for Company Liquidation gains the support of 75% of the company’s shareholders, the company may be placed into liquidation voluntarily.  The shareholders of companies that are insolvent or likely to become so will often seek a voluntary Company Liquidation in order to reap maximum benefit from the company’s remaining assets, before it becomes mandatory.
  2. Court Appointed Liquidation
    The second way a Company Liquidation can be initiated is via an application to the court by a creditor of the company.  If such an application is lodged, a company will be provided 10 working days in which to settle the outstanding debt or appoint a liquidator of their own choosing.  If no action is taken by the time this period has lapsed then the court will appoint a liquidator, often of the creditor’s choosing, and Company Liquidation will be mandatory.

Once a company has entered into Company Liquidation, a liquidator will be appointed to oversee the wind-up of the company and realise company assets.  These assets will be distributed to stakeholders in order of priority stipulated in the Companies Act 1993.  Creditors receive remuneration during a Company Liquidation in the following order:

  1. Secured Creditors
    Those creditors who hold a security over a company’s assets are known as Secured Creditors and given top priority in the distribution of funds during Company Liquidation.  A Secured Creditor will have a stronger priority if they have registered their security interest on the Personal Property Securities Register – those who have not registered will be placed lower in priority to those who have.
  2. Preferential Creditors
    Preferential Creditors fall into three sub-categories within a Company Liquidation.  These are:
  • Company Employees – Employees are entitled outstanding wages for up to four months prior to the Company Liquidation, with outstanding holiday pay up to a maximum of $18,700 per employee.
  • Inland Revenue Department – GST and PAYE owed to the Inland Revenue Department must be repaid during the Company Liquidation process.
  • Petitioning Creditor – A petitioning creditor is the creditor who lodged the Company Liquidation application to the court, in the case of court appointed liquidations.  This creditor is owed remuneration for costs incurred lodging the application as a preferential claim.

3. Unsecured Creditors
Any unsecured creditors to whom the company owes a debt will be placed lowest in priority in distribution during Company Liquidation.   Such creditors will only receive payment once all other claims have been met.

During a Company Liquidation, directors will also be required to complete a Statement of Affairs document and submit it to the liquidator.  This document will include:

  • A description of the company’s history,
  • Details of the company’s trading portfolio,
  • Details of the cause of the company’s failure,
  • A list of all company assets,
  • A list of company liabilities,
  • All shareholder information,
  • Any pending legal claims, either by or against the company.

This information is required to be supported by relevant documentation (e.g. financial reports, accounting records, bank statements, etc.)  The liquidator will use this information, as well as any other information uncovered in the liquidation process, to determine whether the Directors have a personal liability to the company.  The liquidator will also identify any payments that the company has made that may be reversed.

Insolvency Guardian’s team consists of registered liquidators, who have the skills and experience necessary to ensure your struggling company is wound up effectively and efficiently.  Our team will ensure your Company Liquidation is completed to the maximum benefit of all stakeholders.  With the help of Insolvency Guardian, your corporate debts will be resolved once and for all – allowing you the financial freedom to pursue more prosperous business ventures in future.  Company Liquidation from Insolvency Guardian is a high-quality service and offered at an amazingly low price.  You can resolve your company’s debts!  Contact us today for a free initial consultation with complete confidentiality to find out more.