All liquidations are governed by the Corporations Act and are used to wind up and finalise a company’s affairs. A Court liquidation occurs when the creditors have reason to believe that the company is insolvent and cannot pay their financial commitments. A creditor can file an application to the court to request the company be put in liquidation. When a Court agrees with the creditors, the court will appoint a liquidator to realise the assets of the company for payment among its creditors and employee entitlements, or if they are paid in full, to pay any surplus among its shareholders.
If the Court is given reason to believe that the company’s assets are at risk between the time of application and the Court proceedings, the Court may appoint a provisional liquidator. This liquidator effectively takes control of the company and continues to trade in the best interests of the company until the Court advises otherwise.
Upon completion of the liquidation the liquidator will distribute the funds as required by law, in order of: liquidation costs and expenses, employee entitlements, creditors and then members. Each group is paid in full until there is no money remaining. Once the funds are distributed, the company is deregistered and ceases to exist.
SM Solvency Accountants can help guide you through your company’s insolvency and put you back on the path to financial stability today. Our services come with a free, no obligation initial consultation to ensure that we understand your financial situation and can recommend the best strategy to get you out of debt as soon as possible.