The site which answers your questions on insolvency, liquidation, receivership and administration
Our Top 5 Questions
Should I Respond to a Statutory Demand?
Most certainly. When a statutory demand, also known as a Section 289 Notice, is served on company, it has 10 working days to dispute the debt by filing an application to set aside the demand, or 15 working days to pay the debt.
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Should I Respond to a Petition to Liquidate?
This is the second step toward liquidation. Where a statutory demand by a creditor (including Inland Revenue) is neither disputed or paid by the debtor within the requisite period of 15 working days, the creditor may petition to Court to place the debtor company into liquidation.
What Happens when a Liquidator is Appointed?
The liquidator is given full control of the assets and undertaking of the company. This control is however subject to the rights of creditors who have securities over the assets and undertaking. The liquidator has a period of 5 working days in which to prepare a statement of the company’s position and report to creditors. During this period the liquidator will normally determine whether or not to continue to trade. This decision will be coloured by the fact that the liquidator will be personally liable for any debts incurred through trading whilst the company is in liquidation.
Can I Recover my Stock when a Liquidator has been Appointed?
The situation for suppliers of stock has changed significantly since the Personal Property Securities Act came into force in 2001. Prior to this Act suppliers of goods regularly relied on a Romalpa clause on their invoices to protect their title in goods supplied, until the goods in question had been paid for. Although The Personal Property Securities Act has not eliminated entirely the right of suppliers to rely on Romalpa clauses, in practice the security granted by them is normally overridden by creditors holding General Security Agreements (GSA’s) or Purchase Money Security Instruments (PMSI’s).
What is the Difference Between Liquidation and Receivership?
In a liquidation, directors relinquish control of the company to a liquidator. The liquidator has a statutory obligation under the Companies Act to realise the assets of the company for the benefit of all of its creditors. The liquidator may decide to trade on for a short term in an endeavour to achieve a sale of part or all of the business. A receivership however may be a short term event. The receiver is appointed by a secured lender to the company, frequently a bank. His task is to realise sufficient assets to repay the secured lender before he is released.