The Liquidator’s Role

A company may be liquidated when it cannot pay its debts, with a ‘liquidator’ appointed to carry out the task of determining why the company failed and maximising the possible return to creditors.

A liquidator works in much the same way as a trustee in bankruptcy except that the role applies to companies not individuals.

The job of a liquidator is to:

  • Investigate the financial affairs of a company
  • Determine whether any illegal or improper activity has occurred.
  • Maximise the return to creditors.

If a company is being liquidated because it is insolvent the liquidator is answerable to the creditors, and is required to:

  • Collect, Protect and Realise the company’s assets
  • Report back to creditors about the company’s affairs
  • Look into any possible offences by those people running the company and inform the Australian Securities and Investment Commission (ASIC)
  • Distribute the proceeds of any asset sales to creditors normally in order of security
  • On completion of the liquidation, apply to have the company de-registered.

Responsibilities of the Liquidator

The liquidator has the responsibility of bringing the company’s affairs to an end, and in this process is accountable to:

  • the Court;
  • creditors; and
  • the shareholders.

Creditors include employees, secured and unsecured creditors.

The duties of a liquidator include the following:

  • to investigate the affairs of a company from its foundation onwards;
  • to act impartially;
  • to act with skill and diligence;
  • to avoid placing himself in a position where his interest conflicts or is likely to conflict, with his duties.

Talk to the experts on liquidation – Insolvency Choice, to discover more about what a liquidator does.