Voluntary liquidation - advice please!

ToniO

Active Member
Joined
Oct 24, 2006
Messages
98
Hi all

I've been doing some research and am getting conflicting answers. Perhaps someone could help me?

I am investigating voluntary liquidation due to the CC being unable to pay it's debt to SARS. SARS has not requested the liquidation.

One article suggests that

Liquidating does not write off any sureties that the directors or members signed for, but it does write off all other debt. The business owner can continue with the business if so wanted. Any tax debt (SARS – Receiver of Revenue debt) is also written off in the liquidating process.
Another says:

The company is also required to submit security to the Master of the High Court for payment of the company’s debt. This will be for payments to be made within a 12-month period, commencing after the start of the winding up of the company, should it be required. The result of winding up a company, is that the affected company ceases to conduct any business and as a consequence thereof is being removed from the Companies and Intellectual Property Commission (CIPC) registration database.
I don't understand how the company could be expected to provide security for the company's debts if it is being liquidated because it can't pay its debts!

The CC has only one member and it has de facto ceased to do business.
Will the sole member be personally liable for the tax debt if the business is no longer viable, and applies for voluntary liquidation?

I'd appreciate any advice here!
Thanks in advance.
 
Joined
Dec 20, 2019
Messages
19
Hi ToniO

You can file a special resolution with CIPC to voluntary liquidate the Company (CM26), you will move for a Creditor's winding up, as monies are owed to SARS.

Your first article is correct to state that liquidation does not write off any sureties, but the article is incorrect to state that the business owner can continue with the business.
Upon liquidation, the business is now controlled by the liquidator and he/she must realise the company for the benefit of all affected parties, and the business owner losses control of the business.

The security that you refer to is the security required by the Master of the High Court for the payment of all fees for the prosecution of all liquidation proceedings and for the costs of administering the estate until a liquidator has been appointed. This security is not for the payment of Company debts.

As a director of the Company, you have a duty of care in relation to the Company, and upon the first sign of the Company not being able to pay SARS, you must move to alert your creditors of the position / place the company under creditor's voluntary liquidation.
If you do nothing, then CIPC has the power to de-register the Company, and this de-registration will have the effect of vesting the Company debts on the directors in their personal capacity.

Hope this is clear. If not, let me know.
 

ToniO

Active Member
Joined
Oct 24, 2006
Messages
98
Thanks very much for taking the time to reply - this is very helpful.
Much appreciated!
 
Joined
Dec 20, 2019
Messages
19
Glad to assist. Shout should you need any more info.
I am an active liquidator, so I am best placed to can assist.
 
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