Schemes of Arrangement are a seldom used external administration option to restructure a company. The process was largely replaced
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If a struggling company can no longer go on, and directors and shareholders have decided to cease operations, then a voluntary liquidation is a proactive way to deal with the assets and debts of the business.
The purpose of a Creditors’ Voluntary Liquidation is to have a Liquidator take control of the affairs of an insolvent company so that it may be wound up in an orderly fashion for the benefit of stakeholders.
The appointment process initially involves a meeting of directors, followed by an extraordinary meeting of members, where a resolution is passed to appoint a Liquidator. This can happen quite quickly where Consent to Short Notice is agreed to by at least 95% of members.
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 Creditors’ Voluntary Liquidation may be appropriate in your situation, please contact us on 08 9215 7900 for a cost and obligation free consultation.