Liquidation

[Fitness freak]

We've got an argument at office about a CC thats running a lost for a while and owns money to suppliers and to SARS

The owners think they can liquidate this cc and then they don't have to pay there debt, especially for SARS

I disagree, when an owner signed surety they will be liable for the outstanding debt and SARS wound write off money that was not suppose to be used in the first place.

Is my argument correct? Otherwise anyone can open a company spend all SARS money and liquidate your company (this make no sense)

[Marq]

You are correct -just because the cc is running at a loss does not mean it has no capital value. The cc could be would up and assets sold to ensure value is found for the creditors. The members could also, given certain circumstances (like sureties for example) be found personally responsible for the debts.

[sterne.law@gmail.com]

You are correct -just because the cc is running at a loss does not mean it has no capital value. The cc could be would up and assets sold to ensure value is found for the creditors. The members could also, given certain circumstances (like sureties for example) be found personally responsible for the debts.

Furthermore there is the ability to pierce the corporate veil - whereby any other entities can be attacked, even if the shareholders are wifes, cousins etc, etc
Another extra expens ethat comes, is that staff employed would have to be retrenched and paid out. they are also preferential creditors - so guaranteed along with the liquidator, and SARS of getting whatever is available whereafter the spoils are divided up

[Dave A]

You might also want to look at this discussion on liability for VAT. When it comes to VAT, there is no corporate veil.