Creditors Voluntary Liquidation

The company director usually initiates proceedings for liquidation of their company in their company is insolvent.

Before liquidation can proceed all board of directors will hold a meeting to discuss and agree on liquidation of the company with notices being sent to all shareholders and creditors.

A notice should be sent to all creditors ten days before calling the creditors meeting, the notice should also include by a general proxy and special proxy in the precribed format. (A general proxy authorizes the person to whom it is entrusted to exercise a general discretion throughout the matter in hand, while a special proxy limits the authority to some special proposal or resolution).

These taks should be carried out under the 1963 Companies Act, which also states that the meeting should be advertised in atleast two daily newspapers (which is relevant to that area the company is registered or where the compny is based) ten days before the meeting.

The Creditors usually involves three key aspects; to present a statement of affairs to the creditors, to give the creditors an oppourtunity to appoint their choice of liquidator and to give the creditors opportunity to appoint a committee of inspection.

Under the 1963 Companies Act the directors of the company will also have to give a statement of affairs, which generally shows the value of the companies assets together of realisable value, with a list of creditors and amount owed to each of them.