Creditors’ Voluntary Liquidation

A creditors’ voluntary liquidation, is generally a voluntary liquidation of a company, which is unable to pay its due and payable debts and is therefore insolvent.

A creditors’ voluntary liquidation may occur either:

• Through the members (shareholders) of an insolvent company resolving to appoint a liquidator to the company; or
• Following a voluntary administration of a company.

In most circumstances where a company’s shareholders wish to appoint a liquidator to a company, this can be done within a short period of time, by way of the shareholders signing a resolution for the liquidator’s appointment.

There are often benefits to those associated with a company in arranging for it to be placed in liquidation, including:

• It is a way in which a director may avoid personal liability under a Director Penalty Notice issued by the ATO.
• It may limit or reduce the company’s directors’ liability for insolvent trading.
• It may limit or reduce the company’s directors’ liability for certain offences under the Corporations Act 2001.
• It results in an independent person being appointed to the company, who will conduct an orderly winding up of the company’s affairs.
• It avoids the company being placed in liquidation by the ATO or another creditor.

If you would like to obtain further general information regarding liquidation you may wish to access our Liquidation FAQ Page.

If you are seeking advice regarding voluntarily appointing a liquidator to a company, please contact our Brisbane or Gold Coast office and our experienced staff will be able to assist you.