Liquidations

If a company is broke, bankrupt or in debt, liquidation is used to collect its assets, determine the outstanding claims against the company, and sort out the claims in order of the law.

A liquidator is appointed when a company is placed into liquidation. The liquidator takes control of all the company’s unsecured assets, which are sold to repay the creditors. Trading companies are usually closed, although sometimes they might continue to trade for a short time so the business can be sold.

Directors are required to complete a Statement of Affairs form which includes:

  • A brief description of the company’s history
  • Trading details
  • Details of the cause of the company’s failure
  • All company assets
  • All company liabilities
  • All shareholder information
  • Any legal claims by or against the company

The director also needs to help the liquidator locate the business’ records and assets and to answer any questions about the company. Attempting to destroy, hide or remove property records/documents is an infringement and does not end pleasantly! The liquidator will check all of this anyway and most likely find out if any offences have been committed etc.

If it happens that there is a surplus after all the company assets have been dealt with and the debts and liquidation expenses have been paid, then it will be issued back to the shareholders.

Personal Guarantees:

A guarantor is someone who agrees to repay the debt of a company or person if they fail to do so. If the company goes into liquidation or the person enters a personal insolvency procedure (example; bankruptcy) the guarantor will have to repay the creditor. Company directors often guarantee their company’s debts, which means they must repay them if the company goes into liquidation.

Disposals

A disposal contract is an agreement governing the sale of a business’s assets or the entirety of a business. A buyer may be interested in part of a business, leaving the seller with obligations and liabilities, or the entire business is sold including liabilities. It is usual for a buyer to do due diligence on the seller, to understand what liabilities, it will inherit. In some instances, a seller conducts due diligence on the acquiring company, for legacy reasons.

If you would like further help or advice on these subjects, please fill in the form below,
or feel free to contact our team directly.

  • This field is for validation purposes and should be left unchanged.

Humphrey Hart

Senior Analyst and
Entrepreneur.
Read Humphrey’s profile.

solid-icon1b.png
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. xero logo It’s small business accounting software that’s simple, smart and occasionally magical. Log in online anytime, anywhere on your Mac, PC, tablet or phone to get a real-time view of your cash flow. 
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. tax traders logo Tax Traders allows you to buy someone else’s tax to settle your account with Inland Revenue, as well as save on interest and late payment penalty charges.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. smart ar logo Astute cash flow management is essential for operating a small business.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. myob logo Trusted by 1.2 million businesses, myob is New Zealand’s largest accounting solutions provider. The platform is equipped to support the needs of New Zealand organisations.
As a client at Gilligan Sheppard you will access to international networks and resources to enable optimal outcomes for your business/trust/transaction.  accountancy insurance logo Tax Audit Insurance specifically designed for accountants in public practice. This provides cost effective protection and peace of mind against the substantial cost that may be incurred should IR or other government authorities conduct a random review, investigation or audit.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. cpa logo A CPA is a finance, accounting and business professional with a specific qualification. It indicates a soundness in depth, breadth and quality of accountancy knowledge and gives you competitive advantage over your peers.
As a client Gilligan Sheppard you will have access to international networks and resources to enable optimal outcomes for your business / trust / transaction. agn international logo AGN International is a worldwide asociation, composed of four regions, of independent accounting and advisory businesses.
solid-icon2.png
Tax Updates: 30 September 2024
Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion [...]
The blue deck chair: A bank with an infinite game mindset?
In an unashamed take from Graham Norton, I intend to write a few stories called ‘the blue deck chair.’ You are free to pull the lever and flip my chair. So please send feedback, flip, or let me [...]
Philanthropy simplified: How the Auckland Foundation is creating real change
At Gilligan Sheppard (GS), we take our purpose seriously. Enriching lives is our guiding factor in every interaction with our clients, our people, and I would like to say in all interactions in and [...]
Why sisters are better than parents: How to avoid the dreaded locked-in capital gain
New Zealand has an overwhelming fascination with using Holding Company structures in business.   The Holding Company may be entirely passive or may undertake management services for its [...]
Client retention is your secret weapon.
It’s a subject that’s come up a lot lately, and I’m pleased that so many more businesses now understand that their relationships with their clients (client retention) aren’t just a [...]
Tax Updates: 23 September 2024
Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion [...]
Tax Updates: 16 September 2024
Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion [...]
Tax Updates: 9 September 2024
Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion [...]
Tax Updates: 2 September 2024
Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion [...]
Tax Updates: 26 August 2024
Welcome to this week’s review of tax issues where Richard comments on what’s been happening in the world of tax over the past week. If you have a question or would like a second opinion [...]
solid-icon3.png

Click here for details.

We are recognised as authorities in our specialised fields. We publish newsletters with informed opinions that are free for you to subscribe to.

Click here for details.

Richard Ashby (our tax specialist) provides advice, comments and updates on what’s been happening in the world of tax each week.