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Liquidation - Coggle Diagram
Liquidation
Voluntary winding up
The purpose of voluntary winding up is to avoid involving the courts and to allow the company and its creditors to settle affairs between themselves with recourse to the court in the case of difficulty or dispute
A voluntary winding up is commenced by the company passing a special resolution stating that it be wound up voluntarily
The winding up is deemed to have commenced as soon as this resolution is passed resulting in the following consequences
The company shall cease to carry on its business except so far as may be required for its beneficial winding up
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The difference between member and creditors winding up is based on whether the directors make a declaration of solvency which declares that
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They have formed the opinion that the company will be able to pay its debts in fill within such a period as specified in the declaration
If the solvency declaration is made in the 5 week period before the special resolution is passed, the winding up will be a members voluntary winding uo
The winding up will be a creditors voluntary winding up if no declaration is made or if the liquidator disagrees with the opinion of the directors that the company will be able to pay its debts
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The company's assets must be collected and used to pay off the company's debts and liabilities with the remainder being distributed to persons so entitled
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