Liquidation can seem like the worst possible thing that can happen to your company. The word liquidation has a bad reputation and many people can’t think any good that could come out of it.
However, liquation can have its benefits.
A key concern of directors is they will be made personally liable for company debts. This can occur in various circumstances including if the company trades while insolvent.
If a director chooses not to liquidate the company, they could try to defend against a claim of insolvent trading on the basis of the director needing to act in the best interest of the company’s creditors or on some other ground.
However, if directors choose to voluntarily liquidate their company, they may be able to avoid being made personally liable for those company debts. That can be a whole lot less stress to worry about.
Also, once a voluntary liquidator is appointed, they take over the role of dealing with company’s creditors – another less stress to deal with.
Finally, once the liquidation process is complete, the director can move on with their life.
While a liquidator still needs to act in the best interest of the company, in a voluntarily liquidation, the directors are able to choose who will be the liquidator – rather than a liquidator appointed by the Court or others. In this way, directors can choose someone in whom they have confidence and trust – again this can provide peace of mind.