If your company is unable to pay its debts on time, it may be placed into liquidation.
What liquidation means
A company can be placed into liquidation, and a liquidator appointed by:
- court order, or
- a resolution by your creditors at a watershed meeting.
Liquidation takes effect immediately, and liquidated companies are closed down, and removed from the Companies Register.
The role of a liquidator
If your company enters into liquidation, a liquidator is appointed to:
- investigate your company's financial affairs
- establish the cause of its failure
- investigate possible offences by your company or a director of your company.
A liquidator must be a licensed insolvency practitioner.
The liquidator takes control of, and freezes all of, your company's unsecured assets which are then sold to repay your creditors and shareholders.
If necessary the liquidator holds a creditors' meeting to:
- help identify any previously unknown assets
- gather information about your company
- give creditors an opportunity to raise and discuss issues relevant to the liquidation.
The liquidator has significant powers to contact and deal with your company's:
- past and present employees
- receivers, accountants, auditors and bank officers
- others involved in forming or managing the company.
The liquidator must prepare regular reports about the activities and outcomes of the liquidation for creditors and shareholders, and file these reports with the Companies Office.
Your responsibilities as a director
If your company goes into liquidation, you remain in office but your powers as a director are limited.
- cooperate with the liquidator so that the financial and business affairs of your company can be resolved fairly and equitably, and
- provide your company's accounts, records and any other information the liquidator requires.
When liquidation ends
At the end of the liquidation process, the liquidator must prepare and file with us final and summary reports on the activities and outcome of the liquidation.
The liquidator must also give public notice of the intention to remove your company from the Companies Register.
We must wait 20 working days from the date of that public notice to allow any objections to the removal of your company to be filed.
Filing annual returns
Once your company goes into liquidation it's no longer required to file an annual return.