There is no set time limit within which a company liquidation should be completed. The situation will depend on the how complex the structure of the company was and what dealings it entered into prior to liquidation and whether any litigation will be necessary. If no litigation is necessary then the average sized company liquidation should be finalised within twelve (12) to eighteen (18) months. If litigation or other complex matters need to be resolved then this timeframe may be more.
Why does a company liquidation take so long to complete?
A liquidator must attend to many tasks before any company liquidation can be completed. The timeframe for some of these tasks are outside of the control of the liquidator (i.e. waiting for a clearance from ASIC). A brief summary of the common tasks a liquidator must attend to include (but not limited to):
- To call an initial meeting of creditors;
- To realise and distribute the assets of the company;
- To collect the books and records of the company;
- To conduct searches into possible assets owned by the company;
- To open a liquidation bank account on behalf of the company and bank all monies received on behalf of the company into this account;
- To distribute any surplus monies to the creditors of the company (after the costs and expenses of the liquidation have been paid);
- To investigate the affairs of the company and report all materials findings to creditors;
- To file statutory records and statements of accounts with the Australian Securities and Investments Commission (ASIC);
- To file a statutory report with ASIC under Section 533 of the Corporations Act.
- To lodge Business Activity Statements with the Australian Taxation Office; and
- Finally, before the liquidation can be finalised the liquidator must wait to receive a clearance from ASIC. Once this clearance has been received the liquidator will usually then call a final meeting of creditors and the members of the company.
What can I do to assist as a company director?
As a company director, you can assist the liquidator by delivering up the company’s books and records as quickly as possible and respond to any questions raised by the liquidator as promptly as possible.
If you would like to better understand how long a company liquidation may take, please call Australian Company Liquidators on 1800 731 155.