It's never good news when a business has to close, especially if staff and customers depend on the company. For many, this is often as a result of insolvency, when the company is no longer able to pay its debts.
So what comes after insolvency? The most common option is liquidation, and while it can seem a treacherous area to navigate, it's often necessary.
How does it work?
Numerous businesses go into liquidation each year, so you shouldn't feel that it's an altogether uncommon occurrence. In Australia, liquidation is governed under the Corporations Act and there are two courses it can take: involuntary and voluntary liquidation.
Basically, the former is when a court orders that the company wind up operations, and the latter is when shareholders pass a special resolution that operations cease, and the business winds up. In both instances, an appointed liquidator essentially takes over the business to the extent required to close it down.
What's more, throughout the process the directors of the business are obligated to provide any required assistance to the appointed individual.
What happens to staff?
Liquidation is understandably going to be tough on staff, especially if they've been employed by the business for some time.
For staff, there are options available to ensure they're able to receive some form of income after the business closes. This falls under the Fair Entitlements Guarantee (or FEG). This process helps staff to receive up to 13 weeks of unpaid wages, annual and long service leave, redundancy pay and more.
However, this guarantee does not account for superannuation, bonus payments or several others.
How you can make the process smoother
Seeking the assistance of a professional organisation is one of the best ways to make the process smoother. At Corporate Lifeline, we're able to work closely with your company to guide you through the entire liquidation undertaking.
Of course, what if liquidation isn't the only option? Aren't there circumstances in which the business can be saved and returned to operations?
The answer is yes, and Corporate Lifeline works to assess every available option for your company before liquidation is put into effect. This means consulting with our experts who can then work with you to assess all possible avenues.
To ensure the liquidation of your business is a smooth one, or to seek help with insolvency, reach out to Corporate Lifeline.
