The three most common ways which an insolvent company can get placed in liquidation, are:
- A company’s shareholders can agree to appoint a liquidator;
- A creditor which is owed $2,000 or more can make an application to Court to liquidate a company; or
- A company may be placed in liquidation after the voluntary administration process.
If all of a company’s shareholders agree to place the company into liquidation (or in most cases if at least 75% of shareholders agree), the shareholders can sign a resolution appointing a liquidator to the company. The company will be placed in liquidation once the resolution is signed by shareholders and a Registered Liquidator has consented to act as liquidator.
If you are considering placing your company in liquidation you may wish to obtain advice regarding the company’s circumstances and the effects of liquidation. Pearce & Heers assists and advises numerous company directors regarding this process each year and we can prepare necessary documents to arrange for a company to be placed in liquidation and for one of the Registered Liquidators from Pearce & Heers to act as liquidator.
Liquidation by Court Order
A creditor which is owed over $2,000 by a company can apply to Court to have the company placed in liquidation. The creditor must (generally) first issue the company with a Statutory Demand claiming the amount which the creditor is owed and if the debt is not paid within twenty-one days of service of the demand the creditor can then make an application to Court to place the company into liquidation.
Liquidation Following a Voluntary Administration
A company may be placed in liquidation after the voluntary administration process if there is no proposal for a Deed of Company Arrangement (“DOCA”) or if any DOCA proposal is not accepted by creditors.