What is liquidation?

Liquidation is a process by which the affairs of a company are brought to an orderly end by a registered company liquidator. This involves the sale of the company’s property which is then distributed in a fair and equitable manner to creditors. The distribution of property of the company must be in accordance with strict rules imposed upon by the liquidator by the Corporations Act. A company is usually placed into liquidation when it is insolvent (ie unable to pay its bills as and when they fall due).  A company can also be placed into liquidation for other reasons, for example the company can no longer function due to a dispute between the directors or the shareholders want to distribute the retained earnings and paid up capital of the company.