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Liquidation
Practical Law ANZ Glossary w-004-1898 (Approx. 4 pages)
Glossary
Liquidation
A type of external administration (also referred to as winding up) in which a liquidator is appointed to a company to take control of the company and its property, and wind up its affairs in an orderly way for the benefit of creditors.
A liquidator is most commonly appointed in one of the following circumstances:
- Voluntarily by the company itself, where it is either:
- solvent (by a members' voluntary winding up (MVL)); or
- insolvent (by a creditors' voluntary winding up (CVL), and in some circumstances the simplified liquidation process may be adopted by the liquidator within the CVL).
- By court order on the application of a creditor after non-compliance with a statutory demand (a compulsory winding up).
- At the end of a period of voluntary administration where the continuation of the company is not financially viable and creditors have resolved that the company be wound up or where a deed of company arrangement (DOCA) has been terminated.
In an insolvent winding up, the liquidator's role is to:
- Wind down the company's business.
- Recover, secure and realise the company's assets (if any).
- Distribute the assets (proceeds of sale) amongst creditors and deregister the company.
The conduct of a winding up is governed by:
- Chapter 5 (Part 5.6) of the Corporations Regulations 2016 (Cth).
- Insolvency Practice Schedule in Schedule 2 to the CA 2001.
For further information, see: