Do You Know About the Company Liquidation Process in Australia?

Australia is one of the wonderful destinations for doing business and many businessmen from all over the world have set up their business in Australia. However, often due to many different reasons, a company can become sick and will not able to pay to their creditors. 

Under such circumstances, winding up of the company can only be a viable option where the process of company liquidation Melbourne will be initiated by the company directors and shareholders.

In case, the company representative fails to appoint a liquidator then the creditors may go to the court and get a court appointed liquidator who will investigate the reasons for the failure of business as well as determine the various assets and liability of the company.

Having done that, the liquidator will pay all the dues of the creditors out of all the assets that are collected from the company.

Following are various steps involved in the whole process.

1. Directors of the company must declare liquidation

The board of directors has to first make a decision that they are going to wind up their business after ensuring that the company is capable of pay all the debts from their assets to their creditors.

It will be an offense, if the company makes a false declaration about the solvency of their company and they need to inform their decision to ASIC.

2. Company has to pass special resolution

Having declared the solvency, the company members has to pass a resolution to declare winding up their company.

A notice must be served minimum 21 days ahead of next meeting to put vote for this special resolution. In this voting minimum 75% of the members must be agreeable to this resolution and after that it will be passed. 

Then the company will appoint a liquidator and winding up will start from the date of above resolution.

3. Special resolution notice must be published 

The above resolution of winding up of the company that has been passed will be then notified and published in the website of ASIC’s within the end of next business day when a liquidator is also appointed. 

It is therefore necessary that you have to sign up in this ASIC website and also pay the necessary fee before you will be allowed to publish the notice.

4. Liquidator will wind up company’s affairs  

After that the liquidator will start the process of winding up of the company. The liquidator has to lodge with ASIC about detailed list of all the receipts and payments so that actual picture about the company can be known.

If the liquidator notices that the company is unable to pay all their debts within 12 months, then they must either:

  • Conduct meeting with creditors
  • Appoint voluntary administrator
  • Put an application to court. 

5. Liquidator lodges final documents

In case, the liquidator is able to complete winding up then a meeting will be conducted and within 7 days of this meeting, full account of the company may be declared and also inform how the process of winding up was actually conducted. 

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