What is a company liquidator?
A company liquidator must be a Registered Liquidator. They are experienced professionals, usually accountants, who are registered as a liquidator under the Corporations Act 2001. They are appointed to manage the process of winding up insolvent or failed companies. A registered liquidator can also be appointed to wind up the affairs of a solvent company. A liquidator has a wide range of duties to perform including selling assets, investigating the affairs of the company, and paying a dividend to creditors. You must be registered as a liquidator to be appointed to any type of insolvent external administration such as a Creditors Voluntary Liquidation, Court Liquidation, Provisional Liquidation, Voluntary Administration and Small Business Restructuring.
Read on to learn more about how Liquidators work in Australia
- APPOINT A LIQUIDATOR
- What is a company liquidator?
- How to Appoint a Liquidator?
- What is a Registered Liquidator?
- Who can be a Registered Liquidator?
- How can I check if someone is a Registered Liquidator?
- What is a Provisional Liquidator?
- What is a liquidator’s role and purpose?
- How are liquidators paid?
- What are creditors rights to control a liquidator?
- Can I remove or replace a liquidator?
- How are liquidators supervised?
- Can I check if a liquidator has been appointed to a company?
How to Appoint a Liquidator?
At Dissolve, we are commonly appointed in a creditors voluntary liquidation. It is a simple and quick process:
1. Provide us with the company details including the name and A.C.N. – During that call we will quote you our fixed price – sometimes there is no upfront fee.
2. We email you an Appointment Pack within a few hours.
3. You pay the fixed price (if applicable).
4. You sign and date the three documents in the Appointment Pack and send them back to us.
Here is a quick video that further explains the process:
What is a Registered Liquidator?
A Registered Liquidator is the formal name and designation of a company liquidator. A registered Liquidator is a person who is registered as a liquidator under the Corporations Act 2001. They are allocated a Registered Liquidator Number and their name and number appear on ASIC’s Register of Liquidators.
Who can be a Registered Liquidator?
Registered Liquidators act in a legal capacity and are highly regulated. ASIC controls the registration and supervision of Registered Liquidators. It is difficult to become a Registered Liquidator. To become eligible to be a Registered Liquidator a person must:
- Be a member of a recognised Australian accounting industry body.
- Meet approved competency standards and be able to demonstrate significant practical experience.
- Be an Australian resident.
- Have sufficient indemnity insurance.
- Not been disqualified from managing corporations.
- Be capable of performing the duties of a liquidator.
- Be a fit and proper person to be registered as a liquidator.
An application for registration as a Registered Liquidator is made to ASIC and is referred to a committee who will interview the applicant and make the applicant sit an exam.
How can I check if someone is a Registered Liquidator?
You can easily check if someone is a Registered Liquidator on the ASIC website here: Browse Professional Registers (asic.gov.au). Enter the person’s name in “Enter Keywords” and in the “Select Register” dropdown select Registered Liquidator. Of course, at Dissolve we have Registered Liquidators and our registration numbers are:
- Clifford Sanderson – Number 155400 Commenced 28 August 1995
- John Gibbons – Number 4917 commenced 3 June 1987
What is a Provisional Liquidator?
A provisional liquidator is appointed by a court. They are quite rare. Their main purpose of a Provisional Liquidator is to preserve a company’s assets in a situation where a company’s assets are at risk, for example if a rogue director may take them. A provisional liquidator will often later be appointed the liquidator.
What is a liquidator’s role and purpose?
When a liquidator is appointed to a company, the director’s powers are suspended, and the liquidator takes control of all of the company’s affairs. The liquidator then runs through a process which will include the following:
- Lodge various appointment documents.
- Advise various government organisations, such the Australian Tax Office and state government revenue offices, of the appointment.
- Request the director to complete a Questionnaire and to deliver the books and records of the company to the Liquidator.
- Collect and sell the assets of the company.
- Prepare a Creditors Report.
- Reviews the books and records and reports findings.
- Maybe commence recovery processes if there were “hidden assets” or assets that should be recovered.
- If funds are available, pay a dividend to creditors.
How are liquidators paid?
A liquidator is paid from the company’s assets before any payment is made to creditors. In many creditors voluntary liquidations, there are no assets in the company and so in those situations the prospective liquidator will usually require an up-front payment from the director to cover the basic costs of the liquidation.
What are creditors rights to control a liquidator?
Creditors, by resolution at a creditors meeting, may give a liquidator a direction in relation to a liquidation. A liquidator must have regard to these directions but is not required to comply with the directions. If a liquidator chooses not to comply with a direction given by a resolution of the creditors, they must document their reasons. An individual creditor cannot provide a direction to a liquidator.
Can I remove or replace a liquidator?
Yes, creditors can compel a liquidator to call a meeting and can vote at that meeting to replace the liquidator with another of their choice. For a proposed resolution to be passed, a majority in both number and value of creditors voting at the meeting need to be in favour. A creditor can request the liquidator to call a meeting:
- Within 20 business days of the liquidator’s appointment to a Creditors’ Voluntary Liquidation, if they represent at least 5% in value of creditors; or
- At any time if they represent at least 25% of total creditors or if they represent 10% to 25% of total creditors and they cover the cost of holding the meeting.
How are liquidators supervised?
Registered liquidators are supervised, very closely, by ASIC.
Can I check if a liquidator has been appointed to a company?
Yes, ASIC provides a website here: www.Publishednotices.asic.gov.au where you can search by company name or Australian Company Number to find out whether or liquidator or any other type of external administrator has been appointed to a company. It will also tell you which liquidator has been appointed.