Restructuring & Insolvency
Court-appointed liquidations are similar to creditors’ voluntary liquidations in their process. In both cases the subject company is insolvent, the difference lies in how, and by whom, the liquidator is appointed.
Below is a summary of the unique features of a court-appointed liquidation.
Who appoints the liquidator?
In a court-appointed liquidation the creditor, or other party, who has petitioned the winding up of the company will usually nominate a liquidator to be appointed. If the Court is satisfied
with the winding up application, the Court makes orders for the nominated liquidator to be appointed over the company. If no liquidator is nominated, the Court may select the liquidator.
The process of a court-appointed liquidation
The liquidator follows the same process as with a creditors’ voluntary liquidation, with the exceptions of:
- additional report requirements to the Court;
- the order in which creditors are paid changes with the insertion of the petitioning creditor’s costs as follows:
- costs and expenses of the liquidation;
- petitioning creditor costs as set by the Court at the time of the winding up;
- secured creditor and/or employee entitlements depending on the type of asset recovered;
- unsecured creditors; and
If your business is experiencing financial difficulty, contact us to arrange a free, no-obligation discussion to give you clarity on your position and options available.