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Have you seen the recent news about pre-insolvency advisors who enable illegal phoenix activity or you yourself may have gotten involved with some untrustworthy advisors? You as a business owner should be aware of receiving unsolicited contact from untrustworthy advisors. This may include writing to directors whose companies have received notices of winding up applications.

At What Is Liquidation? we understand that operating a company can become an extremely stressful process especially if your business is facing financial distress. This means that you will need to make the right decision for your company.

What are informal appointments? They are generally engagements that are carried out by Insolvency Specialists (i.e. mainly Registered Liquidators) that do not involve any type of formal appointment (i.e. Creditors Voluntary Liquidation, Voluntary Administration, etc) under the Corporations Act or Bankruptcy Act. These types of appointments are typically directly or indirectly insolvency related.

Phoenix activity relates to a transaction where a company director sells or transfers the assets (i.e. plant & equipment, stock, customer list, etc.) and business of an insolvent company to a new company in which they are also company director or otherwise associated with.

It is very important to understand that phoenix activity is illegal, and restrictions are placed on directors under Australian law to deter this from occurring.

Phoenix activities are also a breach of a director’s duties, and therefore directors also need to be aware that civil and criminal penalties and director banning exists for illegal phoenix activities if identified by a Liquidator.

If a Liquidator (i.e. Insolvency Specialist) is appointed to your company, they have a duty to collect and realise the company’s assets for the benefit of the Liquidation. As part of the process, the Liquidator will sell all available assets of the company. This means the Liquidator will have the responsibility of recouping as much money as possible to repay the company’s outstanding creditors (i.e. debts).

You may be asking yourself, “which assets can be sold in the Liquidation process?”. Assets can include motor vehicles, machinery, IT equipment, property and stock. Sometimes company assets subject to a lease, hire purchase or loan are exempt from the sale process as the financier may take control of the process.

The May 2019 insolvency statistics have been published by the Australian Securities & Investments Commission (ASIC) and What Is Liquidation? has summarised some key points about what’s happening in the insolvency market.  

According to ASIC’s statistics there are 654 registered Liquidators in Australia as at May 2019 and 250 of them are placed in NSW. The table below provides a breakdown of the location of registered Liquidators.

if your company is facing financial difficulties, don’t bury your head in the sand, seek professional advice from a Liquidator (Insolvency Practitioner) to work out if voluntarily liquidating your company is the best option for you.

It is very common for directors to voluntarily liquidate their company and one popular option is a Creditors Voluntary Liquidation. This option is better than one or more of your company’s creditors taking legal action and placing your company into Liquidation.

When you are faced with placing your company into Liquidation (mainly a Creditors Voluntary Liquidation) in Australia there are a range of issues that need to be addressed. The way you liquidate your company in Australia will vary depending the specific circumstances of your company.

If you are considering placing your company into Liquidation don’t overlook the experience of the Liquidator (Insolvency Specialist) themselves and their ability to liquidate your company in Australia.

Directors looking to place their company into Voluntary Administration often ask how long the Voluntary Administration process will last. The quick answer to this is between 20 to 25 business days only if there a no complexities involved and the creditors decide to place the company into Liquidation, or the Voluntary Administration should end.

To get a better understanding of the Voluntary Administration process What Is Liquidation? have detailed the key steps and timeframes in a Voluntary Administration.

It is essential for Company directors to be aware that when a Receiver has been appointed to your company (or if you suspect that a Receiver may be appointed), that a Receiver may sell your company property (i.e. Company assets) to pay back the debt owing to the secured creditor.

A Receiver will generally have a wide range of powers to sell Company assets on such terms a Receiver thinks fit, and this will include selecting the appropriate method of sale.

Every year, Australian directors turn to us when they need assistance in resolving their company’s financial difficulties and in most cases when no action is undertaken, there is a strong possibility that a creditor will enforce a formal insolvency procedure (i.e. Receivership or even Liquidation).

At What Is Liquidation we have seen a thing or two of creditor intentions to recover money owed to them even if it means the sale of a business or any valuable assets to pay back what is due to them.

Then there is the scenario of a Voluntary Administration, that provides immediate protection to your company giving the time the Voluntary Administrator needs to help formulate a business plan to save your company, but the only catch is the Voluntary Administrator will take control of your company.