What is it?
This is a quick, simple and generally inexpensive option. Basically, a CVL occurs when a business is no longer able to pay its debts and the shareholders agree under a special resolution that the company needs to be wound up. Your business must be insolvent or likely to become insolvent in order to perform a CVL. The advantage of choosing this route is that all it requires is for the directors and shareholders to agree to this option and a registered liquidator is then appointed.
Days 1 – 7
As soon as you’ve appointed your liquidator, he or she will lodge the relevant documents to ASIC, ATO and other government organisations. You and your directors will then be sent a directors’ pack that includes a questionnaire that needs to be returned along with company records and books. The liquidator then collects and sells the company assets.
Days 8 – 14
The liquidator prepares a creditors’ report, calls a creditors’ meeting and runs it.
Between one to three months
This is when the liquidator reviews the books and records and reports the findings to ASIC. If any hidden assets are discovered, recovery processes can commence. If any funds are available, a dividend will be paid to creditors.
Finalising the liquidation (A further 3 to 4 months and sometimes more)
A final report is prepared for creditors and any documents are lodged with ASIC along with a request that ASIC deregisters the company.
Please note that due to different circumstances, there can be variations from the above. The above is a simple guide line, but ASIC statistics tell us that other liquidators can take years to complete as well.
Other insolvency indicators to look out for:
- Continuing losses
- Liquidity ratios below 1
- Overdue commonwealth and state taxes
- Poor relationship with Bank, including inability to borrow further funds
- No access to alternative finance
- Inability to raise further equity capital
- Suppliers placing company on COD, or otherwise demanding special payments before resuming supply
- Creditors paid outside trading terms
- Issuing post-dated cheques
- Dishonoured cheques
- Special arrangements with selected creditors
- Solicitors letters, summonses, judgements, or warrants issued against the company
- Payments to creditors of rounded sums which are not reconcilable to specific invoices
- Inability to produce timely and accurate financial information to display the company’s trading performance and financial position and make reliable forecasts.
- Non payment of statutory superannuation contributions.
What you need to do
Contact us. We’ll prepare appointment documents for signing that declare your company is insolvent. A meeting of shareholders must then be called to advise them of your course of action. The shareholders must agree to appoint us as liquidators and following this, we’ll handle the rest.
Speak to our professional team on 1300 788 788 for IMMEDIATE solutions for your business.
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