Who Appoints the Liquidator to an Insolvent Company?
The type of liquidation chosen will determine who can appoint the liquidator.
Creditors’ Voluntary Liquidation
A Creditors’ Voluntary Liquidation, also known as a voluntary liquidation, is initiated by the company’s directors and shareholders. The directors and shareholders can nominate and appoint a liquidator of their choosing.
Compulsory Winding up by the Court
A compulsory winding up of a company is ordered by a Court and is usually initiated by a creditor. A compulsory winding up can also be initiated by the Australian Securities and Investments Commission (ASIC) under certain circumstances.
In both scenarios, the creditor who approaches the Court or ASIC will usually nominate the liquidator. The court will usually accept the creditors or ASIC’s nomination unless a conflict of interest is identified or there is some other legitimate reason why their nominated liquidator should not be appointed.
If there has been no nomination by the creditor or ASIC, then the court will nominate a liquidator from its panel of liquidators. If the nominated liquidator consents to the appointment (by signing a consent to act), then they will be formally appointed by the Court to perform the winding up.
It is worth noting, however, that once a winding up application has been filed in court, the company cannot be wound up on a voluntary basis.
To speak to a professional insolvency specialist, please contact Insolvency Services Australia on 1800 003 883. Our toll-free hotline is open 24 hours, every day 7 days a week.