July 12, 2019
A liquidator is appointed, generally because it can’t pay its debts. At the time of appointment, the liquidator becomes the proper officer of the company. At the same time, the company directors powers are immediately suspended.
The powers of the liquidator are laid out in Section 477 of the Corporations Act. A liquidator must be a registered and licensed insolvency practitioner by the Australian Securities and Investments Commission.
Subject to this section, when a company is insolvent, a liquidator will take control of all the affairs of the company, including all the company’s assets, its business and undertakings as part of the liquidation process. In this regard, the liquidator has the power and authority of the Corporation Act to continue to trade on (if it is in the best interest of the unsecured creditors to do so) or to sell the assets as part of the winding up of the company.
Ultimately, however, the role of the liquidator is to collect and realise the company’s assets for the purpose of distributing the sale proceeds to proven creditors to whom the company owes debts.
Apart from the control, collection and sale of company assets, the liquidator must also undertake a detailed investigation into the reasons for failure of the company and the conduct of the directors.
In this regard, the Liquidator will seek to recover the books and records of the company from the directors.
The liquidators will generally concentrate their investigations on whether the company was allowed to trade while insolvent, or how company funds or assets were used by directors. The liquidators will also examine preferential or uncommercial payments as well as unreasonable director related transactions.
At the conclusion of these investigations, the liquidator will report findings to both the creditors and the ASIC.
A Liquidator may commence legal claims against a director or other parties on behalf of a company for the benefit of its creditors. In particular, claims are commonly made for insolvent trading, voidable transactions, director loan accounts and other unreasonable director related transaction.
The list below is some of the duties performed by a liquidator;
Help is available 24 Hours – Call 1300 767 525
A Creditors Voluntary Liquidation is for insolvent companies and despite its name is actually instigated by the directors and shareholders of the company who appoint a liquidator.
Once a liquidator is selected, the process of placing a company into liquidation involves;
The Insolvency Experts – 24 hours, 7 day – 1300 767 525