Process of liquidating a company

Any excess proceeds can be distributed to shareholders.

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Provisional liquidation protects a company’s assets during the liquidation process.

If there are concerns that the company’s affairs are not being properly conducted, a shareholder or creditor can request a court appointed provisional liquidator to oversee the company’s assets, liabilities and distribution process through completion.

More business can be generated, but keep in mind that, in that case, the income derived from business that was generated after the decision was made to stop trading, will go into the insolvent estate and cannot be used by the entity.

One must still earn an income and liquidating an entity will mean to a lot of people that their livelihood falls away.

Companies liquidate for many reasons, such as bankruptcy or simply deciding to dissolve.

Complete liquidation involves a company transferring ownership of all its assets to its shareholders.This is one of the reasons why people trade too long in entities when it should have been closed down or liquidated a long time ago.There is nothing in our law that prohibits anybody from trading in another entity, so one can proceed with business as usual in a new entity.The reason for this is, because, in terms of the Companies Act, the Close Corporations Act and the Trust Property Control Act, a Company, or a Close Corporation or a Trust (“the entity”) is insolvent the moment its liabilities exceed its assets. For this reason the entity does not have to own assets to be liquidated.Sometimes it is a difficult decision to make whether to liquidate an entity or not.You might choose partial liquidation if a segment of your company is discontinued because it was destroyed.