Creditors’ Voluntary Liquidation can be defined as the process where directors make the decision to close the insolvent company. The main reason behind following this procedure is to take control even after the prolonged pressure from creditors. Furthermore, it can also help to deal with the imminence of the petition for winding up the company.
In comparison to compulsory liquidation, this type of liquidation allows directors to nominate their preferred liquidator. As soon as the liquidator is appointed, he/she will deal with the asset realization process for the company and also make distributions among involved creditors. The licensed practitioners at voluntary liquidation Singapore Company can assist directors with all relevant formalities to complete the liquidation process. But directors are advised to avail advice from these experts at an early stage since they may need to understand a variety of responsibilities. The directors of an insolvent company may also need to deal with the losses of the creditors. If directors fail to handle this task, it may cause some personal liabilities in the long run.
What do you need to know about Voluntary Liquidation Singapore?
Voluntary liquidation is a decision to close the operations of a limited company, mainly with insolvency looming threats. The decision is usually initiated with a voting process and once directors decide to proceed ahead, the process of company winding up and dissolution starts. When they proceed with voluntary liquidation, it means the process is not forced by the court.
Voluntary liquidation Singapore is necessary for the solvent companies that are willing to close their operations formally. Members-only liquidation may also appear a preferred method for asset liquidation in a solvent company, mainly before striking it off or dissolving it at the Companies House register.
When to go ahead with creditors’ voluntary liquidation?
Below we have listed a few possible reasons for going ahead with Creditors’ Voluntary Liquidation Singapore:
- One should go ahead with this procedure when there is a winding-up petition submitted by trade creditors. When a company is unable to pay off its debts; it can consider following creditors’ voluntary liquidation instead of compulsory liquidation.
- When the company appears insolvent on the balance sheet tests and the liabilities are exceeding the available number of assets; it is better to consider liquidation. Such situations can otherwise cause an increased level of losses without showing any turnaround for the business. Also, directors may get conscious that continuing any kind of trading activity may lead to wrongful outcomes.
- If the company is not able to pay off its rents and the landlord has called bailiffs for seizing company assets.
- In case the company is lagging behind the actual time to pay agreement and a winding up petition has been issued.
- When the company is experiencing a substantial range of debts, the consequences may unable the company to meet ongoing liabilities. In such situations, if the pressure from trade creditors starts increasing to receive their payments, voluntary liquidation Singapore can be a good idea.