Liquidation Companies - A Guide
Before we start we should look at exactly what a Liquidation of Company does. The following points cover the main activities.
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Investigate the financial affairs of the company focusing on suspicious transactions; report to creditors; report to ASIC; recover money where appropriate, for example from trade debtors; search out the assets of the company and keep them safe; convert those assets to cash; distribute funds to creditors; distribute surplus funds to shareholders; and submit a company de-registration application.
Experience
Being in business for a long time may not necessarily be a reliable indicator that a particular company has the right experience for a given situation. Some questions to ask are: what type of liquidations have been carried out in the past and what was the size and complexity of the companies involved? For example, a liquidator experienced in the liquidation of businesses in the SME sector may not always be a good match for one that focuses on billion dollar companies and vice versa.
Reputation
Examining the evidence of the reputation that a company has earned is potentially the best way to judge the quality of a business. Conducting your own due diligence is a good way to avoid unpleasant surprises. Ask ASIC if there are complaints registered for liquidators you are considering. Any serious complaints against a liquidator will be lodged with ASIC. Ask for the names and contact details for references? Ask how long have they been operating?
Specialty
Establish your precise needs and then choose a liquidator that understands your unique situation. Everyone is good at something but no one can be good at everything. Training In order to be an effective liquidator there are numerous legal, accounting and negotiation skills that a person simply must have. Training goes along side experience so don't just presume that a potential liquidator has sufficient knowledge. Get them to demonstrate it to you.
Communication
If your liquidator makes communication difficult it will make what can be a stressful time even worse. Ask upfront what you should expect in terms of the level of communication and access. Also take note in your initial discussions and observe the interpersonal skills that are exhibited. Do you get a sense that they will tell it like it is or just fluff around the edges making it difficult to arrive at quick clear decisions? Does the liquidator come across as a tough negotiator or a bit of a soft touch? Do they listen or do they push forward with their own preconceived notions and ideas?
Summary
The process that liquidation companies implement is designed to provide the best possible financial outcome for the creditors. Whether the ideal outcome will be achieved is totally dependent on the skill of the liquidator. Do your homework, ask lots of questions before making the appointment.