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Creditors Voluntary Liquidation

Creditors Voluntary Liquidation

A creditors voluntary liquidation occurs when the shareholders of a company resolve to liquidate the company because the company has debts that it cannot pay (i.e. it is insolvent).

A creditors voluntary liquidation is ordinarily undertaken as a last resort for a company that does not have any other viable alternative options. In many instances liquidation could have been avoided if professional advice had been sought earlier and intervention taken at that time.

The role of the liquidator of the company includes, but is not limited to:

  • Taking control and realising all of the company’s assets
  • Investigating the affairs of the company and the conduct of its officers
  • Distributing the surplus assets of the company to its creditors in order of priority

Dye & Co. Pty Ltd is very aware of the impact a creditors voluntary liquidation has on all its stakeholders and the collective experience of its directors in administering creditors voluntary liquidations will ensure that the process is efficient, thorough and timely, benefitting all stakeholders.

For any queries regarding creditors voluntary liquidation, what the process entails, how it will impact you or your client’s company and whether other options are available to you, please call our directors on 03 9818 8800

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What happens to a company once it has been liquidated?

Liquidation means that control of company assets, any conduct of business and the management of all financial affairs becomes the responsibility of the liquidator. The company directors no longer have any control or authority over these matters.

All outstanding debts will be captured by the liquidation and creditors will not be able to seek recovery of same against the company without leave of the Court. This does not prevent creditors from seeking to recovery from directors if the director has signed a personal guarantee.

The liquidator will also conduct an investigation into the affairs of the company and the conduct of its officers which may result in further recover proceeding for voidable transactions and insolvent trading. ASIC may also determine to undertake their own proceedings if the matter is serious.

After completing the investigation into the affairs of the company, the realisation of the assets of the company the liquidator will distribute any surplus to its creditors in the order of priority set down in the Corporations Act.

What is the cost of putting a company into liquidation?

Each company and its complexities are different and so too are the costs of a liquidation. The costs of the liquidation from a company that has sufficient realisable assets will ordinarily be met from the realisation of those assets.

If a company has little or no assets, then a liquidator will generally seek that funds be made available to pay his or her costs of acting as liquidator of the company.

Our cost structure enables us to provide a competitive cost to perform this function.

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