When your company experiences financial distress, a company liquidation may be a possible option for you to consider.
Liquidation refers to the winding up of a company’s affairs. There are two types of liquidation:
1. Creditors’ Voluntary Liquidation
2. Compulsory Court Appointed Liquidation
A Creditors’ Voluntary Liquidations is when the company’s directors and shareholders decide to wind up the company’s affairs. In comparison, a Compulsory Court Appointed Liquidation is when the court orders that the company be wound up, usually upon the petition of a creditor.
But what exactly is the purpose of a liquidation?
When a company is placed into liquidation, it is the role of the liquidator to perform the following primary functions:
1. To identify and sell any assets of the company for the benefit of creditors;
2. To prepare and file a confidential report with the Australian Securities and
3. To identify and recover any preferential payments;
4. To identify and recover any uncommercial transactions; and
5. To identify and recover any unreasonable director-related transactions.
Here at Australian Company Liquidations we can help explain the purpose of a company liquidation in easy to understand terms. Call our free 24 hour insolvency hotline for assistance on 1800 981 070.