Procedure for liquidating a company
Sometimes entities are on the edge of solvency and insolvency.
A bigger worry is always what if a creditor applies for the liquidation of the entity.
(In other applications one must give notice to the other affected party(ies) first with a number of days of notice, before you can place the matter on the court roll.
With liquidations this is different – one approaches the court straight away and then the matter is postponed where after notice must be given to all affected parties (creditors).
These documents will be served on the entity at its registered address as supplied in the aforementioned Affidavit.
Creditors often threaten entities that they are going to liquidate them, without proceeding.
If there are no or little assets, it serves no purpose to liquidate an entity.
Many threats are issued to liquidate, but creditors do not necessarily proceed.
The reason for this is because in terms of the Insolvency Act, when one sequestrates there must be a benefit to creditors.
If one cannot make out a benefit to creditors, the Court cannot grant the order.
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.