Exclusively for Business Owners in Distress

Liquidation (In a nutshell)

When a business dream turns into a nightmare:

You often hear employees saying, “ I am making the boss rich, ” but most employees don’t learn all the financial stress that comes with running a business. Some salaries must be paid, rent, telephone, interest paid on the bank overdraft, etc. – not even to mention SARS. To own your own business (CC or Company), and to manage its profitability, may, at times, be very stressful, and most entrepreneurs that dream of having their own business need to realise this.

Unfortunately, most ventures reach a point of no return – the debt overshadows the income – when this situation arises, the stress levels of the owner, their direct family and stakeholders in a company reach breaking point. This is when sub-standard business deals are formed with long adverse effects. It merely provides immediate relief with no long-term solutions. It is always the best practice to discuss the situation with your financial advisor and to follow the guidance provided by the professional. When the decision is
reached to liquidate the business, it is essential to act fast with the help of professionals.


If you are a member of a CC or a director of a Company that cannot keep the business afloat, then the way out is liquidation.

There are two types of liquidations – the easier option is if all the members agree that there is a financial problem, and a special resolution is taken.

The other option is where one of the creditors lodges a case against the CC or Company. This is a lengthy process with significant financial implications.


Very few people inform members or directors that they must check if they signed a surety if they owe money to a supplier. If they did sign surety, and the CC or Company is liquidated, the supplier will hold the member or director personally liable for the money due for the goods supplied.

Suppose the business has an overdraft facility, vehicle or credit cards at a banking institution. In that case, it is a given that the member or director would have had to sign a surety (you will find it somewhere in the pack of papers that you signed when you opened the bank account). Therefore it is very likely that sequestration will follow after the liquidation.

This is a name that no one wants to mention, especially if the necessary forms were not completed and the monies owing were not paid monthly. The following must be said – if you have cash available, you must pay SARS. The member or director acts as an ‘agent’ for the Government, and money received must be paid over to the Government. Unfortunately, we do not live in a perfect world, and various circumstances may lead to a business not paying over the money monthly. One-month arrears turns into two and then three; before long, you are in a situation you cannot get out of.  In the case of liquidation, SARS also forms part of your creditors.

Yes, it is unfortunate, and with many of the liquidations processed, the only money owing is to SARS. If this is the case, then sequestration won’t be necessary.

Please do not hide any of your assets – it is an offence in Section 132 of the Insolvency Act. If you need help to proceed with an income, you may be can we reach an agreement with the liquidator to purchase back the assets. If the liquidator is under the impression that assets are being hidden, they may request that an investigation occur. The Master of the High Court will also be included in this process. It is advisable to avoid following this route.


The cost of liquidation is R 13,500.00. Yes, companies charge R 70 000 for this same service, but if you have that amount of money available, you should rather pay some of your creditors.


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