What Happens to Leased Assets in Liquidation?

How banks and finance companies typically react to bad news.

FREE Expert Advice 24/71300 767 525
Insolvency Solutions

As Featured In

Lowest Cost Company Liquidation

Leased Assets in Liquidation

If a guarantor can’t service a lease, the finance company can repossess & sell the financed equipment and recover any shortfall from the guarantor.

The Insolvency Experts Can Help:

Explain Your Position

Lowest Cost Liquidations

Provide 24 Hour Support

Understanding Leased Assets in Liquidation

A lease, hire purchase or other finance agreement typically contains a personal guarantee. As such, Directors need to understand what is likely to happen with leased assets in a liquidation setting.

If the sale of a leased asset is likely to generate a positive return to creditors, the Liquidator will take and sell the asset and payout the finance owing.

If however a lease is likely to produce a negative outcome, or a liability, the Liquidator will disclaim any interest in the contract and the asset.

Do You Need Help?

Call 1300 767 525 to speak with us, or fill in your details below and one of our expert advisors will get back to you within 30 minutes!

FREE Expert Advice 24/71300 767 525

If a liquidator finds a company has assets subject to finance, he will compare:

  • The value of the asset -v- its payout value.
  • If the value of the asset exceeds the payout value of the finance – the item has positive equity. The Liquidator will look to sell it the item and payout the finance.
  • If the payout exceeds the value of the asset – it is a net liability. The Liquidator will have no interest in it and will disclaim the contract and the asset.

Where there is positive equity and the director wants to retain possession of the asset, the liquidator may sell the net equity in the contract to the director who is then required to continue servicing the finance agreement.

If the payout exceeds the value of the asset, the liquidator will disclaim any interest in the asset. A disclaimer formally advises the financier that the company has no further interest in the item or the contract.

Once the financier receives this notice, it will act in a number of ways.

Firstly, if they are not satisfied with the director because they have experienced difficulties with payments etc., the Finance Company may repossess and sell the item. If this occurs, the guarantor may be liable for collection fees, penalties and interest as well as being charged for any shortfall on the facility after the item has been sold, usually at auction.

Depending on the size of any shortfall, bankruptcy or the loss or sale of the guarantors’ home or other assets may follow.

Alternatively, if the guarantor is able satisfy the finance company that the finance agreement will be honoured, the financier may be satisfied to allow the guarantor to continue in possession if they continue making payments.

If a guarantor is unable to continue servicing the finance agreement, they may consider selling the financed equipment but as the encumbrance will be noted on the title, clear title will not be able to be provided to any purchaser without the finance company agreeing to a sale.

A finance company will usually give permission for the sale of a leased asset only where the guarantor provides a top up payment to ensure full payout of the finance agreement. It is only at this time the finance company will agree to removal of any listings against the assets’ title.

Free Consultation

Call 1300 767 525 anytime or fill in your details below and one of our expert advisers will get back to you within 30 minutes!

Get Our Free Corporate Insolvency & Liquidation Guide

Lowest Cost Company Liquidation

Speak Directly to a ASIC Licenced Expert, 24/7 not a call centre salesperson!

Our Approach To Helping Your Financial Problems

The Insolvency Experts are ASIC licenced insolvency specialists who will help you FREE of charge and without obligation, 24 hours a day.

All you need to do is call to obtain answers, options and solutions to the most difficult financial situations.

The Insolvency Experts will tell you exactly what you need to know – not what you may want to hear. By doing this, we empower you, through the provision of correct information, to make the best and most informed decisions about your finances in difficult circumstances.

The Insolvency Experts who you will speak with are licenced professionals with over 30 years specialist insolvency experience. We have helped thousands of people just like you in the most dire financial situations.

We have a proven track record of honesty and trustworthiness and seek to maintain the highest ethical and moral standards while providing you with sound, professional advice.

Call – an ASIC licenced expert will assess your financial situation and provide expert tailored advice.

Answers – will be given to every question. There is no time limit on these consultations.

Options – will be canvassed and explained so you can make an informed decision that is best for you and your family.

Solutions – including both informal and formal solutions. These may include Company liquidation or Administration.

Our Key Credentials

24 hour service

Dedicated 24/7 service by Qualified Expert – not a call centre


ASIC Licensed &
Regulated Professionals


Australia Wide Licence

Licenced in every state
of Australia


Google Rating

Rated 5 out of 5 on
Google Reviews