Procedure for liquidating a company
If an entity has no assets, it will not be really worth the while of any creditor to liquidate the entity, because liquidation is one of the more expensive application procedures in the law.The purpose for a creditor to liquidate an entity would be to have the assets of the entity sold so that the creditor can rather get something than nothing. One can only sequestrate, in terms of the Insolvency Act, if one owns a property (or other big, fully paid assets) or if one has cash.If one does not own property and if one does not have a certain amount of cash, then one cannot sequestrate.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.
During this month, the applicant (the entity) must give notice to all creditors of the provisional liquidation order by sending them a copy of the court order.
If you do your homework right and if the timing is right, you can carry on with business almost as usual, whilst the other entity is being liquidated.
Once the decision was made, a resolution will be signed to the effect that the entity will be liquidated.
The only party it is served on before the court date is SARS.
As soon as the provisional liquidation order is granted, no creditor may take any legal action against the entity and any legal action taken is suspended.
We will simultaneously draft an affidavit to be signed by the authorised person (a director, a member or a trustee), who will bring the application, meaning the entity will apply for its voluntary surrender (liquidation application).