A company liquidation is the process to orderly wind-up and to bring to an end the business affairs of a company which has been incorporated under by the Corporations Act. A liquidation is only necessary for a company, ie a Pty Limited or Limited company. If you have operated your business as a “sole trader” and you are insolvent and want to wind up your business affairs you may need to consider personal bankruptcy. A company liquidation should not be confused with personal bankruptcy.
A company liquidation can also be referred to a company winding up.
The liquidation process must be handled by a Registered Liquidator who is licensed by the Australian Securities and Investments Commission. The Registered Liquidator must follow strict procedures as set out in the Australian Corporations Act and must be independent and free of any biasness.
Typically company liquidation is initiated when the company is insolvent.
The role of the liquidator is to gather in and sell the company’s assets and distribute the proceeds to creditors (after the costs of the liquidation have been meet). If there is a shortfall in available assets then regrettably the creditors will get paid or they will get paid on a pro-rata basis.