If a company is in liquidation, and even after the appointment of a liquidator, it may still be possible to reverse the process and reinstate the company to an active state. In certain scenarios, the High Court can make a court order terminating the company’s liquidation if specific conditions are met.
For example, if you missed service of the legal proceedings and allowed the company to fall into liquidation but are now in a position to satisfy the creditors’ demands, you can seek their consent to terminate the liquidation.
Once consent is given, either through paying creditors immediately or proposing a payment plan, the court can terminate the liquidation, giving control of the company back to the directors.
Ultimately, creditor consent is essential if such a course is to be followed, as with their approval, reinstatement of the company becomes a viable option.
If you have a company in liquidation, and you do not want it to be in liquidation, you may be wondering whether you can terminate the liquidation.
Yes, you can. There need to be certain circumstances that exist for the High Court to reverse the liquidation and give the company’s assets back to its director. We see this in a couple of different scenarios.
One such scenario is you received a statutory demand, you received liquidation proceedings, you did nothing on either occasion. Then the matter got called in court, and you did not go to court that day, perhaps you were just too busy working on the business.
Then, a liquidator turns up in your office, telling you the company is in liquidation. Suddenly, you are ready to take it seriously.
In that situation, if you can get the creditors’ consent to reinstate the company or terminate the liquidation, then it is possible to end the liquidation. If you can get the money to pay what is owed to the creditors, then you can terminate the liquidation even after the appointment of a liquidator.
The other instance that we see is where, maybe, you still ignore the statutory demand and liquidation proceedings. But there was nothing you could do about it. You did not have the money available and you could not pay off your debts.
However, perhaps a month later, or a few months later, some opportunities or cash become available. In that scenario, you can go to creditors and make your proposal.
That proposal could be to pay them now or pay them over time, but as long as they consent to the reinstatement of the company, the High Court will terminate the liquidation and reinstate the company.
It is one of those things where, if you have consent, almost anything is possible.
If you need assistance with terminating the liquidation of your business, we can help. Book a free 30-minute consultation with our team.
Brent is the Director of Norling Law. He has a wealth of experience in the District Court, High Court, Court of Appeal and Supreme Court. Brent is passionate about negotiating favourable outcomes for his clients and able to implement this in his daily negotiations.
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