How to be COVIDSafe when visiting Grant Thornton offices. Find out how

Corporate insolvency & liquidation

For a company facing insolvency – when the directors are unable to pay their debts when due – the appointment of an independent registered liquidator can be the best and most proactive option for all key stakeholders. The liquidation process in Australia enables orderly and fair company wind up and can offer a level of protection and relief from responsibility to the directors.

 

Liquidator appointment

The appointment of a liquidator will relieve directors of the responsibility for dealing with the company’s affairs. A liquidator is appointed to an insolvent company in one of two ways:

  • Creditors’ voluntary liquidation: This appointment is generally initiated by a company’s directors who have resolved that a company is insolvent, and where the shareholders have passed a resolution to wind up the company.
  • Court liquidation: This type of appointment is initiated by a court ordering a company be wound up, typically on the application of a creditor seeking payment of unpaid debts.

Roles in liquidation process

list item with text on the right

The director’s role 

Upon appointment of a liquidator, control of the company and its assets passes from the director(s) to the liquidator. In addition, a director is required to provide the liquidator with:

  • a report on the company’s activities and property (otherwise known as a ROCAP)
  • full access to the company’s books and records
  • any other assistance that the liquidator reasonably requires to help with the winding up. For instance, this may include meeting with the liquidator.

This is to ensure that the liquidator fully understands the assets and liabilities of the company in order to complete the winding up.

list item with text on the right

The liquidator’s role

The liquidator’s role in a business liquidation includes: 

  • managing the termination of business operations, the sale of business assets for the benefit of creditors and the collection of receivables
  • dealing with creditor claims and communications, removing a considerable amount of stress from the directors and ensuring that all stakeholders are treated fairly
  • reporting to creditors on the causes of the company’s failure, potential recoveries available to the company and the likelihood of success. These items are addressed through two key reports (and other correspondence if necessary):
    • First report is issued to creditors within 10 business days of the appointment
    • Second report is issued within three months of the appointment - a liquidation may be finalised after the second report or may go on for some time, depending on the complexity of the assessment
  • facilitating the payment of employee entitlements – employees will typically be able to make a claim for unpaid entitlements through the Commonwealth Government’s Fair Entitlements Guarantee (FEG) scheme (only available once a company is placed in liquidation) for up to 13 weeks of unpaid wages, annual leave, PILN and redundancy entitlements
  • distributing funds created or raised during the liquidation process to creditors in accordance with statutory priority arrangements
  • deregistering the company.

How we help

Being faced with business liquidation can be a stressful time for the directors, owners and all stakeholders to the organisation. In the role of a liquidator, we help directors by conducting the process efficiently and with care to ensure the best possible outcome for all stakeholders.   

Our team has extensive experience in managing all types, sizes and complexities of engagements. We are regularly appointed by major financial institutions, regulators and business owners to work on various matters requiring insolvency and restructuring expertise, and have deep experience working with distressed businesses in key industry sectors.

More information on corporate insolvency & liquidation
Court liquidation

When a company is insolvent and facing court liquidation there are key milestones to consider to achieve the best outcome possible for stakeholders.

Creditors' voluntary liquidation

When a company is insolvent, the CVL process is initiated in a two-step process and can provide better outcomes for all stakeholders involved.

Get in touch
Matt Byrnes
Partner & National Head of Restructuring Advisory
Matt Byrnes
Learn more about Matt Byrnes
Matt Byrnes
Partner & National Head of Restructuring Advisory
Matt Byrnes

Get in touch

Grant Thornton Australia collects your personal information so we can send you communications including invitations to future events, industry insights and other relevant communications. You can opt-out of receiving these communications at any time via our preference centre. Privacy Policy.

What is a liquidation?
Insolvent liquidation:

The winding up of a company that is facing insolvency or when debts cannot be paid. An experienced, independent third party typically manages the liquidation process. This independent liquidator can either be appointed by the company’s directors – and where the shareholders have passed a resolution to wind up the company – or by a court.

Subscribe to receive our publications

Subscribe now to be kept up-to-date with timely and relevant insights, unique to the nature of your business, your areas of interest and the industry in which you operate.