Under the Corporations Act, a company that is insolvent may be wound up in a number of ways.
The most common types of liquidation are:
A Court Liquidation
- Where an aggrieved creditor applies for a Court Order to have a compulsory liquidation imposed.
- The creditor or the Court selects the liquidator to wind up the Company under this course of action.
- The company director(s)/shareholder(s) select and appoint a liquidator when this type of liquidation occurs.
The Purpose of Liquidation
The purpose of company liquidation is to enable the orderly winding up of a company’s affairs and the legal structure itself.
It is also a way in which the directors of a company are relieved of the stress of constant creditor calls.
What’s required of Directors?
Regardless of how it is commenced, the liquidation process itself is virtually identical and requires the liquidator to undertake a detailed forensic examination of the company, its transactions and the conduct of its directors and officers.
The moment appointed, a liquidator becomes the proper officer and will take control of the company and its assets for various purposes including distributing what remains. At the same time, the directors powers are suspended.
As a director, you will be required to submit a Report on the Company’s Affairs and Property (ROCAP) – a document that describes the financial position of the insolvent company at the date of liquidation.
You will also be required, under the Corporations Act, to provide the books and records of the Company to the liquidator and to provide reasonable assistance, as may be required from time to time, by the liquidator in respect of his investigations.
How long does Liquidation take?
The Insolvency Experts can have your company placed into liquidation in as little as 24 hours.
While there is no set time limit for completion of a winding up process, we try and complete the process in as little as 4-6 months, where there are no major issues. The reason why the process takes this time is that liquidators are required to report to various government departments and then await the clearance of various steps to be able to move through to completion.
Sometimes however, a liquidation may take substantially longer but this depends on the complexity of the company and the issues involves including pursuing any legal claims that may exist.
Get expert advice 24/7 – Call The Insolvency Experts on 1300 767 525
In selecting a Liquidator, a director should ask any question whatsoever and be satisfied they understand the process of liquidation before commencing.
The Insolvency Experts are Registered Liquidators who are forthright, sensible and commercial and who are able to provide real and practical advice on the process of liquidation.
Is company liquidation the best step for you?
Before you place your company into liquidation you need to know :
- whether company liquidation is the best step for your company and yourself personally and financially.
- if there are other alternatives that are better for you and your family
- what risks exist
As every case is different, we encourage you to call, 24 hours – on 1300 767 525 so that we can provide tailored advice to your specific circumstances.
The Process of Selecting a Liquidator yourself:
- Only speak with a Registered Liquidator such as The Insolvency Experts (Registered Liquidator 296215) to ensure liquidation is appropriate for your company’s circumstances.
You can speak with us FREE of charge and obligation, 24 hours a day, everyday, on 1300 767 525.
Once the decision to liquidate has been made, and a Fixed Director Contribution toward the cost of the winding up agreed, we will prepare and send by email, all the documents needed to place the company into liquidation.
These documents include:
- Minutes of a Meeting of Directors – the directors resolve the company is insolvent and call a meeting of the shareholders who will consider the insolvency and the appointment of a liquidator.
- Consent to Short Notice – normally it takes 21 days to call the meeting of shareholders however this period may be waived if 95% of shareholders sign a Consent to Short Notice. This enables the shareholders to meet immediately.
- Meeting of Shareholders – the shareholders resolve to appoint a Liquidator of their choosing.
- Various forms for lodgement with ASIC that are required to advise and formalise the appointment.
Once the company is in placed into Liquidation, the Liquidator will immediately write to all known creditors and advise them of the appointment and the need to deal only with the liquidator rather than continuing to pursue the Company director. Most directors find this immediately reduced the stress of the situation.
Initial Information to Creditors, includes:
- A short report on the financial position of company.
- A Notice of any Meeting of Creditors that has been called.
- A Summary of Affairs – effectively a balance sheet position of the company at the date of liquidation
- A listing of all creditors names, addresses and amounts owed
- Various ASIC information sheets – such as guides to the liquidation process, creditors rights, as well as details of the calculation and amount of the Liquidator’s remuneration.
The Insolvency Experts – 24 hours, 7 day – 1300 767 525