Rules for liquidating
There are generally two categories of creditor – secured and unsecured: Employees are a special class of unsecured creditors.
In a liquidation, their outstanding entitlements are paid in priority to the claims of other unsecured creditors.
If you are an employee, see Information Sheet 46 (INFO 46).
All references in this information sheet to ‘creditors’ relate to unsecured creditors unless otherwise stated.
Find out what this means for registered liquidators.
A liquidator may call a creditors’ meeting from time to time to inform creditors of the progress of the liquidation, to find out their wishes on a particular matter or seek approval of the liquidator’s fees.
You may also use a creditors’ meeting to ask questions about the liquidation and inform the liquidator about your knowledge of the company’s affairs.
It is possible for a company in liquidation to also be in receivership: see Information Sheet 54 (Corporations Act), a liquidator is not required to incur an expense in relation to the winding up unless there are enough assets to pay their costs.
If the company is without sufficient assets, one or more creditors may agree to reimburse a liquidator’s costs and expenses of undertaking investigations and taking action to recover further assets for the benefit of creditors.