A Creditors’ Voluntary Liquidation is the most common liquidation process in Ireland. It is a process used to deal with a Company that is insolvent.
Creditors’ Voluntary Liquidation is usually initiated by the Company’s directors. The first step is for the board of directors to have a board meeting to agree that the Company should be placed into liquidation and that notices should be sent to shareholders and creditors.
A Members’ Voluntary Liquidation winds up solvent companies, and distributes surplus funds back to shareholders. High Court Liquidations are generally initiated by creditors seeking payment from insolvent companies.
Calling the Creditors’ Meeting
The 1963 Companies Act states that ten days’ notice of the meeting must be given to all creditors. The notice sent to creditors should be accompanied by a general proxy and a special proxy in the prescribed format.
The 1963 Companies Act also provides that the meeting must be advertised at least ten days before the meeting in at least two daily newspapers “circulating in the district where the registered office or principal place of business of the Company is situate”.
Agenda for the Creditors’ meeting
A typical creditors’ meeting has three main items of business. These are:
- To present a Statement of Affairs to the creditors.
- To give the creditors an opportunity to appoint their choice of liquidator.
- To give creditors the opportunity to appoint a Committee of Inspection.
Statement of Affairs
Under the 1963 Companies Act, the directors of the Company are obliged to present a Statement of Affairs. The Statement of Affairs generally shows the book value of the Company’s assets together with their realisable value. The Statement of Affairs should also have a list of the Company’s creditors and the amount of each claim. The statement is prepared to a date close to the liquidation date.
What is the role of a Committee of Inspection?
The Committee of Inspection is made up of members and creditors and their function is to assist the Liquidator when requested, approve fees and legal actions and attend meetings to review the course of the Liquidation.
What happens when a liquidator is appointed?
Once a Company is placed into liquidation the liquidator undertakes the following duties:
- Secures books, records and assets.
- Process employee claims for arrears of wages, minimum notice and redundancy.
- Investigates reasons for the liquidation.
- Sells assets.
- Submits report to the Office of the Director of Corporate Enforcement.
- Agrees claims of creditors.
- Pays dividends to creditors if asset realisations in the liquidation are sufficient.
How Can We Help?
We understand that liquidations are very stressful for people. We can help remove some of the stress by explaining the process and advising you on how to fully prepare yourself for the liquidation. We can expertly deal with all issues, including employee claims. We can advise on all the necessary steps to place a Company into a liquidation. We can also act as liquidators. We have extensive experience of all types of liquidations (from companies limited by guarantee to Public Limited Companies) and also experience of all types of industry ranging from construction, hospitality, to services and manufacturing.
We provide a free consultation to directors seeking advice on their options for dealing with insolvent companies.