Voluntary Liquidation

Voluntary liquidation occurs when the members of a company resolve to voluntary wind up the company's affairs and dissolve. Voluntary liquidation starts when the firm passes the resolution, at which time the company generally ceases ongoing operations, if it hasn't already done so. If the company is solvent and the members have made a statutory declaration of solvency, the liquidation proceeds as a members' voluntary windup of business. In such a case, the general meeting will appoint the liquidator(s). If not, the liquidation will proceed as a creditors' voluntary windup and a meeting of creditors will be called, to which the directors must report on the company's affairs. Where a voluntary liquidation proceeds by way of a creditors' voluntary liquidation, a liquidation committee may be appointed.

Where a voluntary winding-up of a company has begun, a compulsory liquidation order is still possible, but the petitioning contributory would have to satisfy the court that a voluntary liquidation would prejudice the contributories.

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