Members’ and creditors’ voluntary liquidation – purpose and liquidator powers

Company shareholders are able to resolve by special resolution (75%) that their company be placed into voluntary liquidation pursuant to section 491 of the Corporations Act. This may occur because the company is insolvent, and directors wish to avoid any potential insolvent trading claims against them personally, or the business Read more…

Voluntary liquidation – terminating the liquidation and returning control to the directors

There are many reasons why a liquidation may be terminated and control returned to the company’s directors. These include director error liquidating a holding company, retrieving tax losses associated with that particular company or retrieving an asset registered in that company name, or failure to respond to a Creditor’s Statutory Read more…

Payments made to companies by mistake before or after bankruptcy/liquidation

Situations can arise where a payment is made by one party to another party by mistake.  This occurs, for example, where a debtor makes a payment to the incorrect entity within a group of companies, a bank remits funds to the account of an unintended recipient, or a finance company makes payment to a supplier of equipment based upon forged invoices. (more…)

Liquidation of Company Trusts

The judgment of Independent Contractor Services (Aust) Pty Limited ACN 119 186 971 (in liquidation) (No 2) [2016] NSWSC 106, delivered on 23 February 2016, held that a liquidator appointed to a company, which acts solely as the corporate trustee of a trust, must:

1. approach the Court to obtain approval of the liquidator’s remuneration and the liquidator’s disbursements (which the liquidator has a right of indemnity for in priority to trust creditor claims); and

2. distribute trust assets to creditors equally, including employee claims, with no special priority as set out in the statutory order of priority codified by section 556 of the Corporations Act 2001 (Cth).