Company Liquidation Sydney

In the process of company liquidation, the order of priority for payment is as follows:

Secured Creditors

At the forefront are the secured creditors. These are parties that hold legal claims over the company’s assets, often due to agreements like mortgages or charges. They also have the right to appoint a receiver if the company fails to meet its debt obligations. This receiver is responsible for selling off specific assets or the entire asset pool to settle the outstanding debt.

Priority Creditors

Following secured creditors, we have priority creditors. This group mainly includes employees and individuals who, by law, have a privileged position to receive payment before others during the liquidation process.

Unsecured Creditors

Lastly, unsecured creditors come into play. These are entities without specific claims on the company’s assets. This group encompasses trading partners, as well as institutions like the Australian Taxation Office (ATO). Once the claims of secured and priority creditors are met, unsecured creditors might have a chance to recover funds, often distributed as dividends.

At Mackay Goodwin, our team will help you negotiate deals with creditors while following all the required laws and regulations to get the best deal.

At Mackay Goodwin, we have a team of registered liquidators to assist your business during this difficult time. If you’re thinking of liquidating your business, speak to our experts on 1300 750 599.

For directors and shareholders unable to fund any payable liabilities of insolvent companies, choosing to liquidate is the best way to ensure assets are fairly distributed to creditors by an independent external expert, and in a controlled and orderly way.

There are many reasons why an insolvent company should seek liquidation:

• Reduced Expenses: Apart from the initial expenses, there are minimal to no charges. The fees of the authorised liquidators are derived from the proceeds of company assets once they prove to be adequate.
• Eases the Burden on Company Leadership: from the prospect of insolvency-related trading, which includes minimising the financial ramifications of continuous trading on staff and other potential creditors who might not receive their dues.
• Address Your Director Penalty Notice (DPN): In the event that you have obtained a DPN, you could bear personal responsibility for the company’s debts if you fail to take action within the specified timeframe. One approach to resolve your DPN is to initiate the process of liquidation.