Compulsory Or Voluntary liquidation – Both Impact the Status of Company

Every company has to face good and bad times during their course of operation. Some are able to get out of it after lot of struggle, while some end up closing their business. The only hardship in business is financial loss which hampers not only the business, but also the employees working in it. However, simply closing the business isn’t the only solution, because it damages the credit score of the business owner/director and his or her reputation.

Before closing down business, the directors or business owners try their best to come out with a solution. Hence, before filing for bankruptcy or closing down company, the director makes a final call of getting assistance from liquidator or insolvency consultant who assesses the financial condition of the entire company. However, if consultant also suggests shutting down business due to financial condition, then it is wise to do so.

There are two ways of liquidating business –


Under compulsory liquidation (CL) process, the company files for bankruptcy and the court or other regulatory bodies sends notice to close down. Compulsory Liquidation happens when company is incapable of paying debts. The debtors take legal action against the company, thus court and law is involved.


Voluntary liquidation (VL) is a more comfortable process of closing down business. No regulatory board or court is involved in it. However, before making the decision of closing down, board of directors have to get consent of shareholders. The purpose of VL is to get maximum money out of business before it goes into difficult conditions. This is done by selling business and its assets, to pay off debt and other financial obligations.

VL is taken into consideration after seeking assistance for insolvency consultant. They go through all books, ledgers, reports, and bills to assess the financial condition of the company. This is also called financial forensic examination where the liquidator becomes in charge of the business and the director is suspended from his position. However, the director still has to obey instructions of liquidator if they ask for any report.

The Insolvency Experts provides liquidation plus insolvency services at low price all over Australia. They have been in this business for more than 30 years, therefore you can trust their sincerity, knowledge, and professionalism in this field. It was the first company that provided free helpline services for 24/7. After assessing business, they provide VL or other alternatives, strategies for directors, undergo risk assessment with directors, and can also provide assistance if you’re in between any investigation.

In both cases, the end result is shutting down business, because there is no future or profit that comes from it. Thus, instead of going further into debt it is best to get rid of it. However whenever, as director you think of liquidating or dissolving business, do think about all others who’re involved with it. It isn’t easy for anyone to bear financial loss. Although it’s a loss for you as well, but people under you are completely dependent for their family lives on this business.

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