A voluntary liquidation proceeding – based on solvency affidavits – is intended to prevent a situation in which a company's debts are not paid. It has two main mechanisms designed to ensure this. First, the affidavits of the company's managers. The second is the appointment of a liquidator to the company, even in a process of voluntary liquidation. Both of these are intended to ensure that a situation does not arise in which a company will be able to complete a voluntary liquidation process, when it may have a debt that it cannot repay. This is the purpose of the affidavits. These are designed to create personal responsibility of the managers. The affidavits are intended to create security in the hands of the creditors. They are intended to give creditors a tool on which they can rely. The creditor can rely on the affidavit and assume, in light of the affidavit, that the debt to him will be repaid. If the debt is not repaid, the affidavit establishes personal liability of the manager.
Let's say a certain person performs work for a company. The company claims deficiencies in the work (as here the company claimed that the respondent caused damages). After a legal proceeding, the court rejects the claim of work defects. Is it reasonable to assume that in such a situation the company will be able to evade payment of a debt to a certain person who performed the work for it, just because it has undergone a process of voluntary liquidation and its managers have given, prior to the judgment in favor of that particular person, an affidavit according to which the company will be able to repay its debts?
Voluntary liquidation, on the basis of insolvency affidavits is possible only where the company has no debts at the end of it. If the company can have debts, the way to liquidate the company is different, by convening appropriate creditors' meetings and by dividing the company's funds and assets in accordance with the laws of distribution of funds upon liquidation (i.e., according to the various priority laws)" (all my emphases, S.P.T.)