When a company suffers from financial difficulty or insolvency, the company may go into liquidation. This can be done voluntarily or through a court order. Liquidation involves the company’s dealings winding up so that the business operations can cease, and the company can prepare for deregistration.
The liquidation process involves the collection and sale of the company’s assets. Once all assets are sold, the proceeds go towards paying off any debts and liabilities. If there is any money left after this, it is distributed among the stakeholders of the company.
When liquidation is voluntary, it is decided internally and not subject to outside influence. It is decided without the creditors because they will be paid in full from the proceeds raised by the sale of company assets. In court liquidation, a liquidator is appointed by the court, usually following a request by a creditor.
Important notes about liquidation:
• During the liquidation process, the company can still operate, though only if the liquidator deems it to be in the best interest of the creditors.
• The liquidation process has no time limit – it will continue for however long is required.
• The liquidation process is finalised once the company is removed from the ASIC register.
• After a company goes into liquidation, unsecured creditors can no longer commence or continue legal action against a company, unless the court permits.
If your business is in trouble or looks like it is in need of liquidation, please do not hesitate to contact us. Here at The Quinn Group, we have an experienced team of lawyers and accountants who are interested in the welfare of your business. Contact us now by calling 1300 784 667 or submitting an online enquiry.