When a company is unable to pay its debts, liquidation may be one of the options available to deal with its financial position and bring its affairs to an orderly conclusion.
When a company is unable to pay its debts, liquidation may be one of the options available to deal with its financial position and bring its affairs to an orderly conclusion.
Liquidation involves the appointment of a registered liquidator who takes control of the company, investigates its financial affairs, identifies and realises available assets and, where funds permit, distributes proceeds to creditors.
Early action can improve the range of options available and reduce uncertainty for directors, creditors and stakeholders.
Book a ConsultationOnce appointed, the liquidator generally assumes control of the company's affairs. The company's directors are required to assist the liquidator and provide relevant books, records and information.
The appointment of a liquidator generally brings the directors' control of the company to an end.
Directors may be required to provide information about the company's financial position, transactions and circumstances leading to the liquidation. The liquidator will also investigate the company's affairs and may examine transactions that occurred before their appointment.
For directors of a business experiencing financial difficulty, obtaining professional advice early can provide more options than waiting until the company's position becomes critical.
Creditors should receive information from the liquidator about the appointment and the process for submitting details of amounts owed to them.
Whether creditors ultimately receive a distribution depends on factors including the company's available assets, recoveries made by the liquidator and the priority of individual creditor claims.
Liquidation is only one of several formal insolvency and restructuring options that may be available to a company experiencing financial difficulty.
If your business is having difficulty meeting its financial obligations, obtaining advice early can help you understand the available options before the situation deteriorates further.
JLA Insolvency & Advisory provides specialist insolvency, liquidation and restructuring services from our Sydney office.
Contact JLAIf this situation affects you, your business or a company you deal with, confidential advice can help clarify the next step.