Voluntary & Involuntary Liquidation
There are a number of types of liquidations that are divided into two (2) categories:
- Voluntary Liquidations; and
- Involuntary Liquidations.
Voluntary Liquidations are instigated by the director(s) and shareholder(s) of a Company. There are two (2) types of Voluntary Liquidation:
A CVL applies to a company that is insolvent (i.e. has insufficient assets to meet its liabilities) and the director(s) and shareholder(s) decide that the company should be liquidated with a Liquidator to deal with the creditors’ claims.
An MVL applies to a company that is solvent (i.e. has sufficient assets to meet its liabilities) and usually occurs when the director(s) and shareholder(s) decide that the company is no longer required and the assets should be distributed to the shareholder(s).
Involuntary liquidations are liquidations that commence with an Order from either the Federal Court or Supreme Court of Western Australia. The applicants for the winding up Order are varied and can be made by:
- a creditor;
- a shareholder;
- a director; and / or
The two (2) types of Involuntary Liquidation are:
An OL is usually instigated by a creditor. Currently in Western Australia, the majority of the OL’s result from Australian Taxation Office (“ATO”) proceeding to recover outstanding taxes.
A PL is an unusual appointment and occurs infrequently. An Order for a PL usually results when an application is made to the Court on the basis that the company’s assets are at risk, often when there is a dispute between director(s), shareholder(s), etc. The Order can generally be obtained within one (1) day of filing the application and results in a Provisional Liquidator being appointed to safeguard the assets.
For further information regarding Liquidation’s please contact our office.
Whether you are looking for help with your company, business or personal affairs, we can help you find a solution for your financial problems.