As an insolvency practitioner, I occasionally see the impact that shadow and de facto directors can have on companies.
Section 461(k) of the Corporations Act 2001 (Cth) is a discretionary power of the court to order the winding
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In a Court Liquidation, a Liquidator is appointed by an Order of the Court, usually after an application commenced by a creditor.
Ordinarily, If a creditor is owed more than $2,000 (this threshold has been temporarily increased to $20,000 under alterations put in place in response to the COVID-19 pandemic), they can commence steps to wind up a company. This option is often a last resort, but may be the only option available to recover funds that are owed.
The Liquidator’s role is to:
- Realise the assets of the company
- Make inquiries and conduct investigations into the past affairs of the company in order to ascertain the causes of its demise, pursue recoveries in relation to insolvent transactions and insolvent trading offences, and report findings to the Australian Securities & Investments Commission
- After the costs of the liquidation, and subject to the rights of any secured creditor/s, pay dividends to the creditors of the company, first to priority creditors (including employees) and then to unsecured creditors
To speak with us further regarding whether a Court Liquidation may be appropriate in your situation, please contact us on 08 9215 7900 for a cost and obligation free consultation.