A Court Liquidation is usually made after a creditor of the company makes an application to the court which results in a court order. Directors, shareholders and other interested parties are also able to put forward a winding-up application to the court, however, in the majority of cases a CL is made by a creditor. Such applications to the court are generally due to the business being unable to pay its debts, or a significant dispute in place between directors or members. The court liquidation will be initiated when the court orders a registered liquidator to wind up the company’s affairs.
If a court order has ordered your company to be wound up, a process that is quite similar to that of a Creditors Voluntary Liquidation will take place:
Step 1: A registered liquidator will be appointed by the Court to manage the insolvency process.
Step 2: The liquidator will realise the Company’s assets and distribute surplus funds to creditors.
Step 3: The registered liquidator investigates the Company’s affairs and reports to creditors on the Company’s assets and liabilities. At this point the liquidator will also assess any voidable transactions and offences by the company and report on them to the Court.
Step 4: Once all investigations are complete and any property has been distributed, the liquidator will notify ASIC to deregister the company. Upon deregistration, the company ceases to exist and creditors no longer have any claim against the company.
If you’re a director and believe you might need to liquidate your company, Helm Advisory is here to help. We boast a specialist team of registered liquidators and highly experienced insolvency practitioners who can assist your business during this difficult time. Contact us today.