Liquidation is governed by the Corporations Act, 2001. Liquidation is the process of winding up a company’s affairs and having a liquidator appointed to the company. When a Director or Shareholder wishes to liquidate a company they have two options - If the company is solvent then the Members Voluntary Liquidation method is used. If the company is insolvent then a Creditors Voluntary Liquidation method is adopted.
Court Liquidations are used by Creditors who have exhausted options in trying to get paid for services or products they have provided to a company.
Liquidation generally occurs when a company is unable to pay all of its debts as and when they fall due (ie., it is insolvent) or its members wish to end the company’s existence.
If a Director allows a Creditor to wind up the company the Director in due course, will be contacted by a Liquidator and the Director will have to complete a Report as to affairs or (RATA) as it is commonly known. There are serious consequences if you don't assist a Liquidator with their enquiries. The Director must comply even if they have resigned or have filed for Bankruptcy.
Although there are different types of Liquidations, the process used in all types are almost identical.
What are Court Liquidations?