Voluntary liquidation
Phase that follows the voluntary dissolution of a company, during which its assets are liquidated and its debts paid.
Definition
Voluntary liquidation is the phase that follows the voluntary dissolution of a company. Once the decision to dissolve has been taken by the partners, the company is no longer intended to continue its business, but it still exists. Liquidation consists of realising what it owns, paying what it owes and distributing the balance among the partners.
It differs from compulsory liquidation in its origin and in who conducts it. Voluntary liquidation is decided by the partners and conducted by a liquidator whom they appoint, often the manager himself. Compulsory liquidation is ordered by a court, at the request of a creditor or the manager, and conducted by a court-appointed receiver. The former presupposes a solvent company, the latter establishes a cessation of payments.
The liquidator has extensive powers to complete ongoing transactions, sell the assets and settle the creditors. He reports to the partners, who approve the closing accounts. The closure of the liquidation is published, then the striking off is entered in the register, which brings the company's existence to an end.
The duration depends on the complexity of the assets. A company with no activity, no employees and no assets can be liquidated in a few months. A company that holds inventory, a commercial lease or ongoing litigation may spend several years on it, during which the reporting obligations continue.
What liquidation involves
What the liquidator does
They complete ongoing contracts, collect receivables, sell the assets that need to be sold and pay the creditors in the legal order of priority. They keep liquidation accounts and convene the partners to rule on the final accounts. Their mandate ends upon closure.
What must be published
The dissolution and the appointment of the liquidator are subject to publicity, followed by the closure of the liquidation. Creditors have time limits within which to assert their rights, and it is the publicity that starts those time limits running. A creditor who discovers the liquidation too late may have lost the possibility of being paid.
Voluntary does not mean discreet
The procedure is described as voluntary because it is not judicial, not because it would be confidential. The decisions are published, entered in the register and reported in the BODACC. A company in liquidation also states this situation in its documents.
Frequently asked questions
Is a voluntary liquidation possible with debts?
Yes, as long as the company can pay its creditors with its assets. If it can no longer do so, the situation falls under collective proceedings, and the voluntary liquidator must declare the cessation of payments. Continuing a voluntary liquidation while knowing that the creditors will not be paid exposes the director.
How long does a voluntary liquidation last?
It depends on the assets to be realised and any ongoing disputes. A simple company can be liquidated in a few months. Assets that are difficult to sell, litigation or a tax audit can extend the period well beyond a year.
Is a professional liquidator required?
No text imposes one. The partners freely appoint the liquidator, who may be a natural person or a company. A professional is often chosen when the estate is complex or when conflicts of interest exist between partners.