Closing down your company can be a stressful time. If your company cannot afford to repay its debts, it is most likely insolvent. As a director, you have an obligation under the law not to incur any further debts when your company is insolvent and you may wish to consider winding it up and appointing a liquidator.
If your company is insolvent, liquidating the company means your business stops operating and a liquidator is appointed either by the shareholders or by court order. The liquidator’s role is to preside over the orderly winding up of the company.
The liquidator will oversee that there is a fair and equitable distribution of the company’s assets (which must be in accordance with the Corporations Act). The liquidator will investigate the affairs of the company to ensure that no creditor has received any unfair advantages over other creditors (such as received an unfair preference).
The liquidator will record the appointment with ASIC. As a director you will still need to fully co-operate with the liquidator and provide all necessary assistance such as delivering the company’s books and records to the liquidator.
Seeking advice from company liquidation experts can ease this stressful process and help prevent unwanted legal surprises.
If you are company director and you are considering a company liquidation, then call Australian Company Liquidations for free and confidential advice. We operate a 24 hour insolvency hotline. Call now on 1800 731 155.