The 5 Essential Steps to Take Before Appointing a Liquidator

For company directors who have reasonable grounds to suspect they’re at risk of business insolvency, forging a path forward can feel like navigating a series of blind corners. In times of stress and uncertainty, RCR Lawyers help illuminate uncharted terrain, guiding you on a path to the preferred destination (and avoiding costly false steps along the way). 

What is a liquidator? 

If you’ve exhausted all other avenues for your company and you (along with a majority of shareholders) decide it’s time to wind things up via a creditors’ voluntary liquidation, a liquidator will be appointed. As an independent person appointed to oversee the dissolutions of a company that can no longer pay its debts when they fall due, a liquidator has a range of roles and responsibilities under Australian law. Empowered to act on behalf of a company, controlling its activities, money and assets, their primary function is to wind up the company and to generate a return for creditors by selling (or liquidating) any company assets. 

They also have a legal obligation to investigate the company’s financial affairs (which can involve examining the past behaviour of directors), an important factor for any director considering voluntary liquidation to be mindful of. 

Before taking the significant step of appointing a liquidator, we recommend the following: 

1. Get clarity on your situation: 

As a rule of thumb, liquidation should only be used as a last resort. There are several potential benefits of liquidation in circumstances where a company has no realistic chance of avoiding insolvency. However, you should first consider your individual circumstances and consider alternative options like restructuring or voluntary administration. 

RCR Lawyers are seasoned in advising businesses about their financial conditions, providing detailed analyses, and exploring potential alternatives to the irreversible path of appointing a liquidator. 

2. Seek professional advice: 

Once you’ve established a relationship with an insolvency expert, you can delve deep into the detail of a prospective liquidation. It’s essential you feel confident your legal team have he experience and insight to understand the nuances of Australian insolvency law. RCR Lawyers have a proven track record in commercial law, and have helped countless businesses successfully navigate times of financial crisis, including liquidation. 

3. Evaluate your liabilities and assets: 

It’s crucial to take thorough inventory of your debts and obligations, and any tangible or intangible assets, before contacting a liquidator. Ultimately, all these items will ‘come out in the wash’ once the liquidation process begins. Enlisting the help of lawyers to accurately assess your strengths and any exposures from the outset means you can avoid unpleasant surprises. 

Once you’ve assessed your current affairs and sought preliminary advice from legal professionals, it’s time to take action to safeguard your own interests. 


4. Protect your Directors: 

Although the company structure is designed to separate directors’ personal and business lives, liquidation can result in company directors being held personally liable. For example, if the liquidator determines a director knowingly continued trading while insolvent, they can be compelled to pay debts from their personal assets. To avoid this nightmare, it’s essential you get the right advice and craft a proactive strategy with the support of experienced insolvency lawyers. 

5. Communicate with Stakeholders: 

Transparent communication with stakeholders is key to a successful liquidation process. Keeping shareholders, creditors, and employees abreast of developments isn’t just a legal requirement; it’s critical to maintaining trust and support from your stakeholders. Lawyers can assist you in developing a communication strategy that’s both effective and compliant with Australian regulations. 

By considering these five steps with a lawyers’ support, you can approach the complex process of liquidation with confidence, knowing your taking the right steps forward for you, your business, and all interested parties. 

The expert team at RCR Lawyers stands ready to support your business, offering advice that is practical, comprehensive, and tailored to your unique circumstances. In an area of law fraught with potential pitfalls, our mission is to bring clarity, competence, and compassion, always aiming to deliver the best possible outcomes for our clients. 

Don’t face the daunting prospect of business liquidation alone.  

Contact RCR Lawyers for your obligation-free consultation today.  


The blog published by Rostron Carlyle Rojas Lawyers is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the author. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult RCR on any legal queries concerning a specific situation. 

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