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Liquidation
The company liquidation process in New Zealand is a formal procedure that involves winding up a company's affairs, selling its assets, and distributing the proceeds to its creditors. It is governed by the Companies Act 1993 and is typically initiated in situations where a company is unable to pay its debts or is insolvent.
The key steps involved in the company liquidation process in New Zealand are as follows:
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Resolution for Liquidation: The decision to liquidate a company is typically made by its shareholders or directors. A resolution is passed to initiate the liquidation process, and a liquidator is appointed. The liquidator must be a licensed insolvency practitioner.
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Appointment of a Liquidator: The shareholders or directors appoint a liquidator who takes over the management and control of the company. The liquidator's role is to realize the company's assets and distribute any remaining funds to creditors.
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Notification to Registrar: The liquidator is responsible for notifying the Registrar of Companies about the company's liquidation. This involves filing the necessary forms and providing information about the company's financial situation.
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Verification of Claims: The liquidator reviews and verifies the claims of creditors. Creditors are required to submit their claims, along with supporting documentation, within a specified timeframe. The liquidator assesses the validity and priority of the claims.
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Realization of Assets: The liquidator identifies, gathers, and sells the company's assets. The proceeds from the asset sales are used to repay creditors according to the priority of their claims. The liquidator may engage professional valuers or auctioneers to obtain the best possible prices for the assets.
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Distribution to Creditors: Once the company's assets are realized, the liquidator distributes the funds to creditors in the order of priority. Secured creditors, such as banks with registered security interests, are typically paid first. After satisfying the claims of secured creditors, the remaining funds are distributed to unsecured creditors.
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Final Reporting and Dissolution: The liquidator prepares a final report that outlines the liquidation process, including the realization of assets and distribution of funds. The report is provided to the Registrar of Companies and to the shareholders of the company. Following the completion of the liquidation process, the company is formally dissolved and ceases to exist.