A court liquidation is a type of insolvency that requires an application to the Court by creditors, company members or other interested parties to wind up a company due to unpaid debts. A liquidator is appointed by the Court to administer the insolvency process in order to realise the company’s assets and disburse funds to creditors in accordance with established priorities. The responsibility of the liquidator is to investigate the company’s affairs and report any offences and other relevant matters to shareholders. A court liquidation allows for a systematic approach to winding up a company and bringing its affairs to an end.
What causes a Court Liquidation?
- Non-payment of debts to stakeholders, causing interested parties to apply to the Court in order for the company to be wound up
- Recovery actions by the ATO and Directors’ Penalty Notices (DPNs)
- On-going losses and inability to improve trading performance
- Directors, shareholders or investor disputes
- Directors at risk of insolvent trading
- When creditors become concerned that assets are being removed from the company
What are the expected outcomes of a Court Liquidation?
- Once all company assets are realised, investigations are complete and distributions to creditors are made, the liquidator will apply to ASIC to deregister the company
- Creditors will no longer have any claim against the company and the company will no longer exist
- Secured creditors are still able to exercise their rights
- Certain transactions can be recovered by a liquidator for the benefit of all creditors (see voidable transactions)
- In some cases, insolvent trading actions can be taken against the directors for recovery of funds for the benefit of creditors
How can SV Partners help?
SV Partners are able to administer a court liquidation as an independent third party in accordance with the relevant law. Once appointed, the responsibility is on the liquidator (SV Partners) to ensure that appropriate investigations are undertaken and the best possible outcome is achieved for all interested parties. Our team understand the impacts of insolvency and how this is detrimental to all parties involved. SV Partners are approachable and are highly qualified in dealing with all situations to find the best possible solution.
For more information about Court Liquidations, visit our FAQ section or alternatively call our confidential assist line on 1800 246 801.