Liquidation
The process of winding up a company, realising its assets and distributing the proceeds to creditors before the company is deregistered.
What happens in liquidation
Liquidation is the orderly process of bringing a company's affairs to an end. A liquidator is appointed to take control of the company, collect and sell its assets, investigate its affairs, and distribute any proceeds to creditors according to the order of priority. Once the process is complete, the company is usually deregistered and ceases to exist.
- It can begin voluntarily, by a decision of members or creditors, or by order of a court.
- Directors' powers generally cease once a liquidator is appointed.
What it means for creditors
Creditors in a liquidation typically lodge a claim and share in whatever funds are recovered, ranking behind secured and priority creditors. Returns to unsecured creditors vary widely and may be modest or nil. Lodging early and providing supporting records helps. This is general information only and not legal or financial advice. If a debtor company has gone into liquidation, you can refer a debt to discuss next steps.
Confused by the jargon?
Our team explains your options in plain English — and recovers what you're owed, commission-only.