Liquidation by Court Order

A creditor who is owed over $2,000 can apply to Court to have a liquidator appointed to an insolvent company. 

The Court may also appoint a liquidator to a company as a result of an application made by a director or member (shareholder) of the company, the company itself, a provisional or voluntary liquidator, or the Australian Securities & Investments Commission (ASIC). Most commonly a liquidator is appointed to the company by the Court on the application of a creditor, as a result of the company failing to pay the creditor a debt or debts which it owes.

The purpose of appointing a liquidator to an insolvent company is to have an independent and suitably qualified person take control of the company, investigate its affairs, determine whether any assets or funds may be available or recoverable to pay creditors and wind up the company in an orderly and fair way for the benefit of all creditors. A liquidator who is appointed to an insolvent company will:

• Take control of the company’s assets.
• Examine the events and circumstances preceding the winding up of the company and potentially recover company property which has been unfairly dealt with.
• Examine the company’s financial position in the period leading up to liquidation, in order to determine whether the company traded whilst insolvent.
• Report to creditors regarding the results of the liquidator’s investigations and the prospect of a dividend being paid to creditors in the liquidation.
• Provide for a fair and equitable distribution of the company’s property between creditors.
• Lodge a report with the ASIC regarding any offences committed by those associated with the company.

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

If you wish to seek our consent to act as Court appointed liquidator of a company, please contact our Brisbane or Gold Coast office.