While business rescue is an excellent tool for saving companies, it is not always successful. In some cases, liquidation becomes the best or only option. Understanding when to move from rescue efforts to liquidation protects directors, creditors, and employees from even greater losses.
What is Liquidation?
Liquidation is the legal process of winding up a company’s affairs by selling off its assets to pay creditors.
After liquidation, the company is dissolved and ceases to exist.
Liquidation in Zimbabwe is regulated under the Insolvency Act [Chapter 6:04].
Signs That Business Rescue May Not Work
- The company has no realistic prospects of future profitability
- Creditors reject the rescue plan
- Costs of rescue outweigh benefits
- Severe damage to business reputation or supply chains
Voluntary vs Compulsory Liquidation
- Voluntary Liquidation: Initiated by company shareholders or directors
- Compulsory Liquidation: Ordered by a court, usually on a creditor’s application
Choosing voluntary liquidation often offers more control over the process.
How RPBS Supports Liquidation
RPBS provides responsible liquidation support by:
- Ensuring compliance with legal obligations
- Communicating clearly with stakeholders
- Managing asset sales to maximise creditor recovery
- Protecting directors from misconduct allegations
We ensure liquidation is handled professionally, transparently, and with minimum disruption.
Protect Yourself as a Director
Directors have legal duties during business distress. Failing to act can result in personal liability for company debts.
Taking early advice from RPBS can protect you and ensure an orderly process.
Learn more: World Bank Guide to Insolvency and Creditor Rights
Conclusion
Business rescue is ideal, but when it is no longer feasible, liquidation must be approached carefully and professionally.
RPBS is here to support you every step of the way, whether in saving your business or winding it down properly.