Company Liquidation – The Process
“Placing a company in Liquidation is a fairly easy process if the Directors and shareholder/s agree to place the company in Liquidation”
The Process
Firstly, the Directors and the members resolve to appoint a Liquidator. Once the members resolve to appoint a Liquidator, the company is in Liquidation. The Liquidator then must cause a meeting of the creditors of a company in liquidation to be convened within 11 days from the date of the passing of the resolution by a company’s members to wind it up. The Liquidator is required to give creditors seven (7) day’s notice of the meeting.
The initial meeting is convened by a report to creditors from the Liquidator advising of his/her appointment and the circumstances leading up to his/her appointment.
At the meeting, creditors may resolve to:
▪ Remove the Liquidator from office and appoint someone else as Liquidator
▪ Approve the remuneration of the Liquidator;
▪ Appoint a Committee of Inspection; and
▪ Destroy the books and records of the Company upon completion of the Liquidation
Entitlement to vote at meetings
Any creditor can vote at a meeting of creditors as long as their claim has been admitted partially or in full by the Liquidator for the purpose of voting at the meeting.
All resolutions are carried on the voices by creditors attending (in person or by proxy). If this outcome is inconclusive or if requested by a creditor, the vote will be put to a poll.
Other meetings
After the initial meeting of creditors, the Liquidator may convene further meetings of creditors as and when required depending on the size and scope of the winding up and his/her need to address issues with the body of creditors. However, the Liquidator is only required under Corporations Law to hold an annual meeting of creditors within three months after the anniversary of his/her appointment and each succeeding year thereafter and a final meeting of creditors upon the conclusion of the winding up.
Timeframe
There is no prescribed timeframe under Corporations Law for a Liquidator to carry out the winding up of a company. A Liquidation of an asset-less company normally takes 3-6 monthsdepending on how quickly the Liquidator is able to complete his/her investigations. However it is important to note that the length of a Creditors Voluntary Liquidation is subject to the complexity of the work required to be undertaken by the Liquidator in realising assets (including insolvent trading claims and voidable transactions) of the Company.
