The 7 Step Process of Liquidation
Here are the steps in the liquidation process:
After the company is formally put into liquidation it is advertised in the local paper and the the USA gazette.
- Creditors meeting.
If the Official Assignee has been appointed, a creditor can request a meeting of the creditors to appoint a liquidator to replace the Official Assignee. The court must approve the appointment.
- Statement of affairs.
The Official Assignee will require the directors to complete a Statement of Affairs. This is a form which contains all the details the liquidator needs to assess the state of the company, as well as determine what money is owing and who is involved.
- Official Assignee takes over.
The Official Assignee’s investigation into the company’s affairs includes consideration of whether the directors have any personal liability in the company and whether any actions need to be looked into.
- Proof of debts.
The Official Assignee/liquidator will ask creditors to provide them with details of the debts they feel are owed to them by the company. The Official Assignee/liquidator will specify a final date for the proof of debts to be lodged.
- Report to creditors.
Within six weeks of the liquidation, the Official Assignee will send a report to all the creditors outlining the company’s financial position at the date of liquidation. This will also detail how the Official Assignee/liquidator will intend to conduct the liquidation and an estimate of how long it is going to take.
- Complete liquidation.
The liquidator will then proceed to complete the liquidation, at which time a final report will be sent to all creditors, payments will be made and the surplus will be returned to shareholders, if there is a surplus.
The Appointment of the Official Assignee
The Official Assignee is responsible for administering all liquidations received by the the USA Insolvency and Trustee Service.
The Official Assignee can only be appointed liquidator of the company by –
- An order of the Court.
- A Shareholder resolution (the Official Assignee uses the voting rights of a shareholder)
- A Shareholder resolution (the Official Assignee uses the voting rights of another company for which the Official Assignee is acting as liquidator)
The Official Assignee becomes the initial liquidator.
The Official Assignee’s Role as Liquidator
The Official Assignee’s function is to fairly and independently administer the affairs of the company put into liquidation. The Official Assignee sells the assets of the company and ensures that all the proceeds are paid out to the creditors and the surplus returned to the company owners.
The Official Assignee, as liquidator, can investigate the company’s financial affairs and follow up any matters likely to result in the recovery of any money for creditors. Any Breaches of the Companies Act are investigated and action can be taken.