This article will discuss what is liquidation and who is liquidator Australia. We will also provide a list of the requirements to become a registered liquidator, their roles and duties, and some tips for choosing a liquidator Australia. When a company in Australia becomes insolvent, it can be difficult and stressful for everyone involved.
However, a group of professionals are dedicated to helping companies through this process in a fair and orderly way: liquidators. Registered liquidators are independent professionals registered with the Australian Securities and Investments Commission (ASIC).
They are appointed to take control of a company’s assets and affairs when it is wound up. They are allocated a Registered Liquidator Number and their name and number appear on ASIC’s Register of Liquidators. Not all insolvency professionals choose to join an insolvency-specific professional association.
However, the Australian Restructuring Insolvency and Turnaround Association (ARITA) represents professionals who specialise in the fields of restructuring, insolvency and turnaround.
Liquidators play a vital role in the Australian economy. They help to protect creditors and employees by ensuring that companies are wound up fairly and transparently. They also help to maintain confidence in the Australian business community.
What Is Liquidation, and Who Is a Liquidator?
‘Liquidation’ and ‘winding up’ are frequently used interchangeably. However, legally speaking, “winding up” refers to the entire process of dissolving a corporation under the Corporations Act 2001 (Cth).
On the contrary, liquidation is the precise process of converting the company’s remaining assets into cash (thereby making them “liquid”). A person known as a “liquidator” is responsible for supervising and managing the entire procedure.
Requirements for Becoming a Liquidator Australia
The Australian Business Licence and Information Service provides for the eligibility and registration requirements to become a liquidator in Australia.
To become a legitimate liquidator, you must satisfy the requirements provided by ABLIS to be appointed to any type of insolvent external administration. If you want to apply for registration, you must fill out this form.
Once your registration is full and complete, you will be issued a licence that you are recognised and qualified to undertake liquidation processes in Australia. Here are the eligibility requirements:
Membership in a recognised accounting industry body – The applicant must be eligible to be a member of a recognised accounting industry body in Australia or its international equivalent.
Tertiary qualifications – The applicant must have tertiary qualifications in accounting, law, or business.
Experience – The applicant must have relevant experience in accounting, law, or business.
Completion of a course in insolvency – The applicant must have completed a course in insolvency that the Australian Securities and Investments Commission (ASIC) approves.
Completion of a minimum number of hours of relevant professional development The applicant must have completed a minimum number of hours of relevant professional development, including at least 120 hours in the three years before registration.
Good character – The applicant must be of good character and not have been convicted of certain offences.
You need to be an Australian resident to become a registered liquidator Australia. Also, you must:
Provide proof of sufficient indemnity insurance
Have not been convicted of an offence involving fraud or dishonesty in the previous 10 years
Have not been disqualified from managing corporations
Be capable of performing liquidator duties
Be a fit and proper person.
Once these requirements are met, the applicant can apply to ASIC to become a registered liquidator. The registration is subject to the current conditions imposed on the registered liquidation.
Role of a Liquidator Australia
The role of a liquidator in Australia varies depending on the type of liquidation but generally includes the following duties:
Collect and protect company assets. The liquidator is responsible for identifying, collecting, and protecting the company’s assets, including any money owed to the company.
Investigate the company’s affairs. The liquidator must investigate the company’s financial affairs, including its assets, liabilities, and transactions leading up to the liquidation.
Report to creditors. The liquidator must report to the creditors on the company’s affairs, including the investigation results and the liquidation status.
Sell company assets. The liquidator must sell the company’s assets to raise money to pay creditors.
Distribute funds to creditors. The liquidator must distribute the funds raised from the sale of assets to creditors according to a hierarchy of ‘priority creditors.’
Comply with legal requirements. The liquidator must comply with all legal requirements, including reporting to ASIC and the court and obtaining court approval for specific actions.
Act in the best interests of creditors. The liquidator must act in the best interests of the creditors and not the company or its directors.
Cease trading. The liquidator must ensure that the company ceases trading and is wound up orderly. If the company continues to trade whilst insolvent, the director may be at risk of breaking insolvent trading laws.
Author info
JB Solicitors is a Sydney-based law firm offering legal services across various areas of law including family law, commercial law, property law, commercial law and immigration law among others.
Discussion about this post