Advisors Role During Liquidation
Advisors are often involved in the liquidation process. Involvement can vary from simply recommending a client contact a liquidator, to acting as an intermediary between the client and the liquidator. We are happy to liaise with an Advisor and can assist them in finding the “least drastic” solution.
Advisors are consulted in the pre appointment phase to help provide information to the liquidator to help assess solvency and risks of personal liability.
They often help complete the documents that need to be completed at the start of the process that go into the company’s financial position and history.
They help to provide the company’s books and records to the liquidator.
Protecting Your Client
Whilst a liquidation can be helpful to the directors of a company, there are also risks involved. A key element of the liquidation process is an investigation into why the company failed. If it is uncovered that the director has breached the corporations act, we are obliged to act on that.
The best way to be forewarned of potential problems is to run through our pre liquidation checklist with your client. It helps to identify any issues prior to commencing the liquidation. If an advisor calls with questions about a hypothetical situation, we can give more detailed advice than if we were speaking to a director about liquidating their company.
It’s not uncommon that we are required to serve a demand on the director of the company for repayment of a director’s loan, or for insolvent trading. A well thought out letter from an advisor carries weight when defending such a situation.