What causes a Court Liquidation?
There are a variety of circumstances that could result in a Court Liquidation occurring. This includes 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) and ongoing losses and inability to improve trading performance may also lead to a Court Liquidation.
In addition, when creditors become concerned that assets are being removed from the company, where director, shareholder or investor disputes are taking place or where directors of a company are at risk of insolvent trading, a liquidator may be appointed by the court in order to wind up 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 and 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.