secured creditor and they won’t participate in the liquidation process until they have realised their security. Instead a secured creditor will reply on their security for the repayment of their debt and will sell the asset to recoup their debt. If there is any shortfall after the sale of the asset, they can prove in the liquidation for the shortfall amount.
A secured creditor can choose to surrender their security and prove in the liquidation for their entire claim, but this is most unusual.
A secured creditor needs to be very careful when they vote a meeting of creditors in a liquidation. For the purposes of voting, a secured creditor should only claim and vote for the anticipated shortfall in their security. In their proof of debt they must disclose:

1. the particulars of their security;
2. the date when it was given; and
3. estimate the value of the security and any anticipated shortfall

If the secured creditor doesn’t follow these strict rules as set out in Regulation 5.6.24 of the Corporations Act, then it must be taken that the secured creditors has surrendered their security (unless a court rules otherwise).
If you would like to understand the effect of liquidation on secured creditors we would always recommend that you obtain independent legal advice. We can make a referral to an independent legal adviser if that becomes necessary.
The information provided in this site is general in nature and should not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

The appointment of a liquidator will have significant effects on unsecured creditors can be varied and also complicated. In most situations the creditor will lose the ability to recover any outstanding direct from the company. The unsecured creditor will need to register its claim with the appointed liquidator. Claims are registered thorough a proof of debt (form 535).
We examine other ways that a liquidation may affect unsecured creditors, these may include the following:

Preferential payments

If any unsecured creditor has received a payment which the liquidator considers to be “preferential” may be clawed back under certain circumstances. The starting point is for the liquidator to examine what payments the company made within 6 months of the liquidation (if it was a voluntary liquidation) or within 6 months of a winding up application being filed in court (if it was a court winding up). Although the liquidator can examine transactions up to 4 years if the payment was made to a related party (ie a person or company related).
Other issues for the liquidator to prove are:
That the creditor was preferred to other creditors as they received more than they would receive through the liquidation of the company;
That the company was insolvent (ie the company was unable to pay its debts as and when they fell due) when it made the payment.

Goods secured by PPSR charge

If any creditor holds security over goods which has been registered under the Personal Property Securities Register, then that creditor may be able to recover these goods from the liquidator.

Court action

Once a company has been wound up (either on a voluntary or compulsory basis) a creditor is unable to commence any fresh litigation against the company. The reasoning behind this is to prevent a company in liquidation being subjected to actions that are expensive and, therefore, carried on at the expense of other creditors of the company. A creditor wanting to commence litigation against a company that is in liquidation will need leave (or approval) of the court (section 500 (2) of the Corporations Act. A court is more likely to grant that leave, if for example the purpose of the litigation is to claim against an insurance policy held by the company.
If you would like to understand the effect of liquidation on unsecured creditors, please call Australian Company Liquidators on 1800 981 070.
The information provided in this site is general in nature and should not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

A liquidator may decide to trade-on a business if he or she believes that the business may be able to be sold as a going concern and a sale of the business would provide creditors with a better return. To justify the decision to trade-on the liquidator would need to do an assessment to confirm that the value of the business as a going concern would exceed the value of the assets if they were sold individually. In doing this assessment, the liquidator should determine if trading losses may be incurred whilst the business is prepared for sale or other substantial costs would need to be incurred to prepare if for sale. If trading losses are likely to be incurred, then the liquidator should notionally deducted these from the expected sale price of the business and compare the net expected sale proceeds to the break-up value of the assets. This analysis is critical because any trading losses could erode the net return to creditors. The liquidator has a duty of care to the company and to the creditors, so in order to discharge that duty a liquidator must act in the creditor’s best interests.
If the liquidator needs to trade the business for longer than 3 months (in order to sell it as a going concern) then court approval would be required.
If you would like to discuss to circumstances in which a liquidator can trade-on a business whilst the company is in liquidation, call the company liquidation experts on
1800 981 070.
The information provided in this site is general in nature and should not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

If you are a director of a company and it goes into liquidation (either you placed it into liquidation on a voluntary basis or the court ordered for it to be wound up) you will have obligations to the liquidator. These obligations include, but may not be an exhaustive list:

1. To attend the first meeting of creditors;
2. To provide a Report as to Affairs to the liquidator what is a Report as to Affairs
3. To provide the company’s books and records to the liquidator what books andrecords will I need to deliver to the liquidator?
4. To attend to any request from the liquidator. In this regard the director has an obligation to assist the liquidator, which may include providing information, explaining the nature of the company’s business or the nature of a transaction which the company entered into.

For this reason it is important that you select a liquidator that you believe you will be able to work with. Our registered company liquidator is professional and will work with the company directors in a co-operative manner. Call us today on 1800 981 070 if you want to discuss what may be expected of you as a company director if you place your company into liquidation.
The information provided in this site is general in nature andshould not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

In short the role of the liquidator is to preside over the orderly winding up of the company. In this regard the powers of the directors are suspended and the Liquidator is the only person who has authority to act on the behalf of the company. The liquidator will oversee that there is a fair and equitable distribution of the company’s assets (which must be in accordance with the Corporations Act). The liquidator will investigate the affairs of the company so as to ensure that no creditor has received an unfair advantages over other creditors. If such a case is found the liquidator, in certain cases, can claw back some payments made shortly before liquidation Will any Payments Made Before Liquidation be “clawed back” by the Liquidator?.
The role of a liquidator is to conduct the company liquidation what is a company liquidation? and will be responsible for:

• To act in an independent and> unbiased manner;
• winding up the affairs of the company;
• To realise and distribute the assets of the company;
• To distribute any surplus monies to the creditors of the company (after the costs and expenses of the liquidation have been paid);
• To investigate the affairs of the company and report any wrong doings such as potential claims for preferential payments, insolvent trading what is insolvent trading?; and
• The liquidator’s findings must be reported to creditors and the Australian Securities and Investments Commission. After clearance has been received by ASIC, the liquidator may proceed to finalise the liquidation.

Independence

A liquidator must be entirely independent and free of any conflict. They must always act in an impartial manner. Before a liquidator can accept an appointment, they must prepare and then distribute to creditors (after they have been appointed) a declaration of independence, relevant relationship and indemnities (DIRRI). The DIRRI must set out any known relationships with the company or the company’s directors and shareholders. It must also set out any up-front payments or indemnities received from the company or its directors andor shareholders to conduct the liquidation.
If it is later found that a liquidator was not independent or has not acted in an impartial and unbiased manner, then they may be removed by a court order. An actual lack of independence will be regarded as a very serious matter by the courts, particularly if the liquidator fails to properly investigate a director or has preferred or assisted the director in any way.

To realise and sell company assets

The liquidator has a duty to firstly identify and then protect the assets of the company. The liquidator will need to make enquiries to ensure that the company’s assets are not subject to finance. If they are subject to finance, then only the finance company will have authority to deal with those assets. The liquidator also has a duty to sell the assets for their market value.

To distribute any surplus monies to the creditors of the company

The liquidator will first pay for the costs and expenses of the liquidation. The costs and expenses of the liquidation will include the liquidator’s remuneration. Other costs and expenses may include:

• Statutory filing fees with ASIC;
• Legal fees; and
• Other expenses incurred in the winding up of the company.

To investigate the affairs of the company

The liquidator has a statutory duty to investigate the affairs of the company. The investigation must include a review of the transactions which the company entered into within a set time period prior to liquidation. The time period to be reviewed will depend on whether the transaction was entered into with a creditor which was related to the director or not. If the creditor is related to the director then the time period to be reviewed will be 4 years prior to liquidation. If the creditor is not related to the director, then the time period to be reviewed will only be six months prior to liquidation.
The liquidator will also need to investigate and

• If the company traded whilst it was insolvent;
• If the directors breached any of their statutory duties to the company;
• If the company entered into any uncommercial transactions; and
• If the company entered into any unfair director related transactions.

If you would like to better understand the role of a liquidator, please call Australian Company Liquidators on 1800 981 070.
The information provided in this site is general in nature and should not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

If your company has been placed your company into liquidation this event will be recorded on ASIC’s database.  If one pays for a personal name search, the company liquidation will show up on the search. This listing should, however be removed when the liquidation has been completed.
 

How will this affect any application for finance?

If you have a company which is in liquidation and you need to refinance your personal assets or you are seeking additional personal finance andthe new financier is concerned about the company liquidation, then you can ask the liquidator if they would be prepared to issue a letter to state whether or not they have any objections to you obtaining additional personal finance.  A liquidator would only consent to providing this letter if they have no claim against you as the company director.  If the liquidator has a claim against the company directors then it is unlikely they would be prepared to write such a letter.
If you would like to discuss more about how a company liquidation may affect your personal credit rating, then call the Australian Company Liquidators on 1800 981 070.
The information provided in this site is general in nature and should not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

There is no set time limit within which a company liquidation should be completed. The situation will depend on the how complex the structure of the company was and what dealings it entered into prior to liquidation and whether any litigation will be necessary. If no litigation is necessary then the average sized company liquidation should be finalised within twelve (12) to eighteen (18) months. If litigation or other complex matters need to be resolved then this timeframe may be more.

Why does a company liquidation take so long to complete?

A liquidator must attend to many tasks before any company liquidation can be completed. The timeframe for some of these tasks are outside of the control of the liquidator (i.e. waiting for a clearance from ASIC). A brief summary of the common tasks a liquidator must attend to include (but not limited to):

• To call an initial meeting of creditors;
• To realise and distribute the assets of the company;
• To collect the books and records of the company;
• To conduct searches into possible assets owned by the company;
• To open a liquidation bank account on behalf of the company and bank all monies received on behalf of the company into this account;
• To distribute any surplus monies to the creditors of the company (after the costs and expenses of the liquidation have been paid);
• To investigate the affairs of the company and report all materials findings to creditors;
• To file statutory records and statements of accounts with the Australian Securities and Investments Commission (ASIC);
• To file a statutory report with ASIC under Section 533 of the Corporations Act.
• To lodge Business Activity Statements with the Australian Taxation Office; and
• Finally, before the liquidation can be finalised the liquidator must wait to receive a clearance from ASIC. Once this clearance has been received the liquidator will usually then call a final meeting of creditors and the members of the company.

What can I do to assist as a company director?

As a company director, you can assist the liquidator by delivering up the company’s books and records as quickly as possible and respond to any questions raised by the liquidator as promptly as possible.
If you would like to better understand how long a company liquidation may take, please call Australian Company Liquidators on 1800 981 070.

Before you decide to put a company into liquidation it is best that you firstly understand what is involved with a company liquidation. what is a company liquidation.
In brief, a company liquidation is the process of winding up a company’s affairs and having a liquidator appointed to the company. The liquidator will first identify and then realise the company’s assets. The assets may be sold at auction or by public tender (the method of sale will depend on the nature andvalue of the assets). Once the assets have been sold, the liquidator will then report these results andthe findings of their investigations into the affairs of the company to creditors. The liquidator will also hold several meetings of creditors How many meetings of creditors will a liquidator hold during the liquidation process. If the liquidator is only able to distribute 50 cents in the dollar (or less) to creditors then a confidential report must be filed with the Australian Securities and Investments Commission with section 533 of the Corporations Act What reports must a liquidator lodge with ASIC?

How is a liquidator appointed?

In short there are two ways a company can be placed into liquidation, either on a “voluntary” basis or a “forced” basis.

Voluntary Liquidation

A liquidator can be appointed by the directors and shareholders of the company on a voluntary basis. This is known as a Creditors Voluntary Liquidation. The process must begin by the directors holding a meeting of the board of directors. If the majority of directors approve of the liquidation, then the board of directors can nominate a liquidator and call a meeting of the members (shareholders). The members (shareholders) must then pass the resolution for the company to be wound up. This resolution is a special resolution, so it needs to be passed by 75% of the members present at the meeting.
The benefit of a voluntary liquidation is that it is quick andcost effective. The directors and shareholders can also select the liquidator, although it needs to be noted that creditors have the power to replace the nominated liquidator at the first meeting of creditors which must be held within the first 11 days of the liquidator being appointed.

Involuntary Liquidation

The creditors can also force a compulsory winding up of the company through the courts. This is known as a Court Liquidation or Compulsory Winding Up. The most common way for a company to be wound up by the court starts with a creditor issuing a Creditors Statutory Demand what is a statutory demand. Any creditor owed $2,000 or more can issue a statutory demand. If the debt listed in the statutory demand remains unpaid 21 days after the statutory demand was issued, the company is deemed to be insolvent and the creditor can apply to court for the company to be wound up. The creditor who applies to court is known as the petitioning creditors and can nominate a liquidator of their choosing. Once a winding up application has been filed in court, the company is not able to be wound up on a voluntary basis. Therefore, if your company receives a statutory demand and cannot pay the debt set out in the demand, you should consider appointing a liquidator on a voluntary basis before the 21 day notice period expires.
If you would like to discuss how to put your company into liquidation, please call Australian Company Liquidators on 1800 981 070.
For more general information on director banning orders, call the company liquidation experts on 1800 981 070.
The information provided in this site is general in nature andshould not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

Generally speaking, if you have not been involved in two (2) or more company collapses within the last 7 years then it is unlikely that the Australian Securities Investment Commission (ASIC) will impose a director banning order against you. However, in more serious cases ASIC has imposed a director banning order after the director’s involvement in the first company collapse. This occurred in the case of HIH Insurance which collapsed in the early 2000s. ASIC imposed a director banning order through the court and it was found that the directors had breached their duties as directors in that they had:

• Failed to exercise due care and diligence;
• Failed to exercise good faith;
• Improperly used their position as a director (i.e. abused their powers); and
• Improperly used information they had obtained as a director.

This case is a reminder that ASIC can impose a director banning order, even if it is the director’s first involvement in a company collapses. Company directors must observe proper standards and act strictly in accordance with the law and not place their personal interests ahead of those of the company.

What happens if I receive a director banning order?

If you have received a director banning order, you will be unable to act as a company director or take part in the management of a company for the time period set out in the notice. The usual time period for a banning order is for one (1) to five (5) years, however it can be up to ten (10) years for more serious matters. A director banning order is not automatic and if you receive a notice setting out ASIC’s intention to issue such an order, you will firstly be given an opportunity to appear at a private hearing at ASIC and make submissions on the matter.
Company directors should also be aware, that if you become personally bankrupt you will automatically become ineligible to act as a company director for the time that you are bankrupt.
For more general information on director banning orders, call the company liquidation experts on 1800 981 070.
The information provided in this site is general in nature and should not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.

The Corporations Act (Section 556) sets out a strict order in which funds are to be disbursed in a company liquidation. The act stipulates that the following must be paid in priority before any monies can be distributed to ordinary unsecured creditors:

1. First – any expenses incurred by the liquidator in obtaining and realising the company’s assets (this includes any costs incurred in trading on the business);
2. Second – if the company was wound up by the Court then the petitioning creditor’s costs (i.e. the legal fees incurred in winding up the company);
3. Third – if the company was placed into Voluntary Administration prior to liquidation then any expenses incurred by a Voluntary Administrator;
4. Fourth – if the company was wound up by the Court then any costs incurred to prepare a Report as to Affairs for the company;
5. Fifth – if the company was wound by a resolution of the creditors following a Voluntary Administration then any costs incurred in preparing a report for the liquidator;
6. Sixth – if ASIC orders an audit of the liquidator’s six monthly receipts and payments then the costs of that audit;
7. Seventh – if the liquidator incurs any expenses in winding up the company then those expenses;
8. Eighth – the liquidator’s fees;
9. Ninth – if a committee of inspection has been appointed then the costs incurred by the committee;
10. Tenth – employee’s wages andsuperannuation;
11. Eveleth – any personal injury compensation;
12. Twelfth –employee leave of absence;
13. Thirteenth – any redundancy payments to employees;

If there is insufficient money (after the above priority payments have been made) to pay unsecured claims in full, then ordinary unsecured creditor claims will be paid on a pro-rated basis.
If you would like to discuss how the liquidator disburses funds in a liquidation, call the company liquidation experts on 1800 981 070.
The information provided in this site is general in nature and should not be relied upon for your specific circumstance. Call us on 1800 981 070 for a free initial consultation to discuss your specific issues.