Official
(or Court) Liquidation
Where
the recalcitrant directors of a company refuse either to acknowledge
that a company is insolvent or to place the company into some form
of insolvency administration, creditors or the other directors may
be forced to initiate the action themselves.
When creditor
instigated administrations come into being, there is generally some
semblance of hostility present, either from management or staff. This
calls for a combination of assertiveness and interpersonal skills.
In this
regard, the ethos of this firm puts us in good stead in restoring
the confidence of employees and suppliers, especially where the business
may be carried on.
Court
Liquidation
In this type of administration, Liquidators are appointed by the Court
in response to a creditor’s petition. The most likely reason
for a creditor’s petition is when a company fails to respond
adequately to a creditor’s demand for payment of a debt.
Where
the Liquidator is appointed by the Court, it is known as an Official
Liquidation. Only Registered Official Liquidators may be appointed
by the Court.
The Official
Liquidator takes possession of the company’s assets, realises
them and, after meeting the costs of the liquidation, distributes
the proceeds to the creditors.
Other
than the method of appointment, the administration of an Official
Liquidation is very similar to that of a Creditors’ Voluntary
Liquidation.
The Official
Liquidator will also conduct investigations into the affairs of the
company and the activities of its officers, for the purpose of recovering
further assets or discovering any breaches of the Corporations Law.
Payments
are made to creditors strictly in order of priority as provided for
in the Corporations Law.
