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Company liquidation is serious. Whether you are a director facing winding up or a creditor owed money, Boss Lawyers provides clear, strategic advice to protect your interests.
Liquidation — also known as winding up — is the process by which a company’s affairs are brought to an end. Its assets are realised, its debts are paid (to the extent possible), and the company is ultimately deregistered.
At Boss Lawyers, we regularly act for directors, creditors, and other stakeholders in all types of liquidation proceedings. We understand that liquidation often involves urgent decisions with significant personal and financial consequences.
Whether you are a director seeking to understand your obligations, a creditor pursuing a debt, or a party affected by a company’s collapse, we provide practical, commercially focused advice.
There are three types of liquidation under the Corporations Act 2001 (Cth). The type of liquidation depends on the circumstances of the company and how the process is initiated.
A creditors’ voluntary liquidation occurs when the directors or shareholders of an insolvent company resolve to wind up the company. The company’s shareholders pass a special resolution to wind up the company, and a registered liquidator is appointed. This is the most common form of liquidation for insolvent companies and often follows a failed voluntary administration.
A members’ voluntary liquidation is used when a solvent company wishes to wind up its affairs. The directors must make a declaration of solvency, stating that the company will be able to pay all of its debts within 12 months. An MVL is typically used for planned business closures, restructures, or to distribute surplus assets to shareholders.
A court-ordered liquidation (also called compulsory liquidation) occurs when the Court orders that a company be wound up. This usually happens on the application of a creditor, often following a failure to comply with a statutory demand under section 459E. The Court may also order winding up on the application of ASIC, the company itself, or other parties on grounds including insolvency, oppressive conduct, or that it is just and equitable to wind up the company (section 461).
Once a liquidator is appointed, the liquidation process follows a structured path:
The liquidator is a registered liquidator appointed to wind up the company’s affairs. They are an independent officer who owes duties to the company, its creditors, and the Court. The liquidator’s key functions include:
The liquidator has extensive powers under the Corporations Act, including the power to carry on the company’s business (to the extent necessary for its beneficial winding up), disclaim unprofitable contracts, examine officers and other persons about the company’s affairs, and compromise claims.
Liquidation has serious consequences for directors. These include:
When a company goes into liquidation, employees are often owed significant amounts for outstanding wages, annual leave, long service leave, and redundancy pay. The Corporations Act gives employee entitlements priority over unsecured creditors in the distribution of assets (section 556).
Where the company’s assets are insufficient to meet employee entitlements, eligible employees may be able to access the Fair Entitlements Guarantee (FEG) scheme. The FEG scheme is a Commonwealth government safety net that covers:
FEG does not cover all entitlements and does not apply to all employees. Directors and their relatives, for example, are excluded from the scheme. Employees must lodge a claim with the FEG scheme and also lodge a proof of debt with the liquidator.
One of the liquidator’s most important functions is to investigate and recover voidable transactions. These are transactions entered into by the company prior to liquidation that can be set aside by the Court. The main types of voidable transactions are:
The relation-back period for voidable transactions is generally 6 months before the relation-back day (the date the winding up application was filed or the company entered administration), but extends to 4 years for transactions with related parties.
If your company is facing liquidation, here is what you need to know:
For more information about our insolvency services, contact Boss Lawyers on 1300 267 711.
Liquidation is often the most consequential event in a company’s life. It affects directors, creditors, employees, and shareholders — and the decisions made during the process determine who gets paid and who does not.
At Boss Lawyers, we provide clear, practical advice to all parties involved in the liquidation process. We understand that liquidation raises complex legal and commercial issues, and we work to identify the most effective strategy for each client’s circumstances.
Whether you are a director seeking to understand your personal exposure, a creditor pursuing a recovery, or an employee owed entitlements, we bring the same level of rigour and commitment to every matter.
Liquidation matters require a lawyer who understands both the legal framework and the commercial realities. At Boss Lawyers, we bring over 22 years of combined experience across thousands of insolvency and commercial litigation matters.
We focus on practical outcomes. Our approach is direct — we identify the real issues, explain your options clearly, and work to achieve the best possible result in your circumstances.
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For experienced liquidation and winding up advice in Brisbane
In a creditors’ voluntary liquidation (CVL), the company’s shareholders pass a resolution to wind up the company and appoint a liquidator. In a court-ordered liquidation, the Court orders the winding up, usually on the application of a creditor after the company fails to comply with a statutory demand. The key difference is who initiates the process and the level of Court involvement.
Yes. Directors can be personally liable for debts incurred while the company was insolvent (insolvent trading under section 588G). Directors may also face liability for breaches of duty, involvement in voidable transactions, and personal guarantees they have given to creditors.
A statutory demand is a formal demand issued under section 459E of the Corporations Act requiring a company to pay a debt exceeding $4,000 within 21 days. If the company fails to pay or apply to set aside the demand within 21 days, it creates a presumption of insolvency that can be used to support a winding up application.
The duration varies significantly depending on the complexity of the company’s affairs, the number and value of claims, and whether the liquidator pursues recovery actions. Simple liquidations may be completed within 6 to 12 months, while complex matters can take several years.
The Corporations Act prescribes a strict order of priority under section 556. In general terms, the order is: (1) costs of the liquidation, (2) employee entitlements, (3) secured creditors (from their security), (4) unsecured creditors. Within these categories, there are further sub-priorities. Unsecured creditors typically receive cents in the dollar, if anything.
Generally, no. Once a liquidator is appointed, the company should not be entering into new trading arrangements. The liquidator may continue to trade the business to the extent necessary for the beneficial winding up of the company, but this is a decision for the liquidator, not the directors.
If you need experienced legal guidance regarding liquidation and company winding up, contact Boss Lawyers today. Call us on 1300 267 711 or complete the enquiry form above.
Boss Lawyers Pty Ltd — Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
