Company Liquidation

How are the funds paid out in a company liquidation?

When a company is placed into liquidation, the liquidator has the task of selling the company’s assets and using those funds to pay out the costs of winding up the company. There is an order in which the funds are to be paid out, which is set out in the Corporations Act (Section 556) and is to be strictly followed.

The following costs are to be paid in this order before any ordinary unsecured creditors can receive any funds. This includes an order of paying any expenses incurred by the liquidator, any petitioning creditor’s costs and legal fees, other professional fees and employee wages and entitlements.

If, after all of the above have been paid in full, there is not enough money left over to pay 100% of ordinary unsecured creditor claims, then the unsecured creditors will receive a partial dividend on a pro-rata basis.

For a more detailed account of fund distributions or if you are considering a company liquidation and have concerns about your liabilities being paid in full, call us on 1800 003 883.


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