In Australia the Corporations Act defines the powers and functions of a liquidator. A liquidator is appointed at the begin of a company liquidation to manage and carry out the winding up of a business ensuring that assets are collected and all claims are settled prior to the business is dissolved. Directors must comply and cooperate with the liquidator at all times and make obtainable the company’s monetary records and details of all relevant business affairs. Failure to comply with the requests of the liquidator will invoke the offence provisions of the Corporations Act.

What is a liquidation?

A company liquidation is the process of winding up a company’s affairs in an orderly manner to ensure that it is assets can be distributed fairly to creditors where required and it is structures dismantled. Appropriate investigations would also be carried out to figure out if there is any wrong performing that should be pursued. This is in contrast to simply selling a business where the company structure itself remains intact.

What does a liquidator do?

A liquidator’s responsibilities consist of looking for out, protecting and realising the assets of the business. Investigations into the financial affairs of the business will probably be conducted to be able to uncover any possible illegal or dishonest behaviour. When the investigations are total, reports will be sent to the creditors and to the ASIC. Following realising the assets and recovering any money that is owed to the company distributions will probably be made to creditors and if there is anything left over, to shareholders. Once all of these tasks have been completed the liquidator will apply for de-registration of the company.

Can a business trade whilst being wound up?

In theory, yes, however most often the business will have closed or have been sold prior to liquidation. The choice to continue trading is at the discretion of the liquidator who will do so if continued trading will result in an improved outcome for the creditors and members. If trading is continued it might do so for a time determined by the liquidator.

How lengthy does the liquidation process last?

There is no set time limit for the liquidation process. The liquidator will act within the most efficient manner feasible to recover assets and cash, to carry out its investigations and to make distributions as needed.

When does the liquidation procedure end?

The company liquidation process ends when the company is struck off the businesses register by the ASIC, when a court sets aside or stays the winding up procedure or when the company is dissolved by a court order after application by the liquidator.

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