How Liquidation Can Help to Save Jobs

It is your responsibility as a business owner to protect the assets of your business. Part of this entails getting to know the requirements of the Companies Act, and knowing when it is time to speak to South African liquidation experts. Though it may seem strange, liquidation can be used as a means to save the jobs of employees, and to continue with business operations.

 

When You Must Liquidate Your Business

The Companies Act of South Africa states that a company must liquidate as soon as its liabilities exceed its assets, or when the company is not able to pay its debt. In reality, many business owners do not comply with the requirements of the Companies Act, and continue to operate their companies for months past the date that they should have liquidated their business.

They do so in the hope to rescue their business, but without professional help, it is often impossible to get the business back on track. It is irresponsible, as it jeopardises the future of employees, the interest of shareholders, and the future of suppliers and trading partners. They are affected by the company’s inability to pay its debts.

It is time to speak to South African liquidation experts the moment your company’s liabilities exceed its assets, or when the company can no longer pay its debts. It may feel like the final nail in the coffin, but by doing so sooner rather than later, you can minimise the effects of the liquidation on your company’s assets, including on employees.

 

What If You Decide to Push Forward Without Liquidation?

If you do not liquidate the firm when required by law, you as director or member of the company become personally responsible for the business debt. As such, you risk your family’s future in the process. This is so, even if you did not sign surety for the business debt. In addition, yes, you become responsible in your personal capacity for the debts owed to SARS. By seeking guidance from South African liquidation experts early on, the above scenario can be avoided. Liquidation is a legal process whereby you can indeed get rid of debt owed by the business.

 

How Liquidation Helps

Firstly, you comply with the requirements of the Companies Act by liquidating the company when it is unable to pay its debts, or when its liabilities exceed its assets. Secondly, it enables the business to get rid of its debt and to continue with business. An unexpected VAT audit, or perhaps large sum that your business had to pay to SARS, may have left the business bankrupt. It is still a good and working business, but its liabilities exceed its assets and it cannot pay its debt.

The South African liquidation experts can show you how to proceed with the liquidation. You need to register another business entity and start trading in it. In this way, the business continues. Now it is time to decide on the last day of trading for the insolvent business. Once the date has been decided, you must stop trading in the bankrupt business, and cannot pay any debts.

The employees have already moved over to the other business entity, and as such, they get their salaries. The law provides that a business can liquidate without assets. SARS will not prevent the business from liquidating, as the law states that the company must do so if it is insolvent. As South African liquidation experts will explain, liquidation can be used as a means of business rescue, and if the correct strategy is followed according to the requirements of the law, it is possible to give the business a fresh start.

Call on our team of attorneys if you want guidance from South African liquidation experts on how to proceed in applying for the surrendering of your company’s financial estate.

 


Disclaimer: This article is for informational purposes only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.

CONTACT US
close slider