What Are The Different Types Of Liquidation in Sydney

Liquidation is a systematic form of “winding up” the activities of a company that is going through a financial crisis. The process involves stopping sales related activities and operations. It allocates surpluses, and proceeds among shareholders and creditors. After discharging of the assets, the company deregisters itself from the Company House register and gets closed.

Insolvency Experts is a leading company liquidation Sydney that has a team of ASIC registered company liquidators who are available 24*7*365 to help small and corporate businesses in areas of liquidation and insolvency.

In this article, let’s learn more about liquidation, its objective and types.

What is the role of liquidation?

The primary objective of liquidation is to ensure that a firm is wound-up justifiably and justly and its arrears paid when due. If a business can do it, then it is considered solvent, if it fails, then it is insolvent.

What are the different types of liquidations?

Liquidations are classified into below types:

Creditors’ Voluntary

When the director of the company or its member’s wind-up an insolvent firm, they name their preferred liquidator to start a meeting of the creditors to figure out if another liquidator should be permitted to continue with the winding-up, or should be named.

The Liquidator is answerable to dissolve the affairs of the company and allot its funds according to the Corporations Act.


When a creditor firm files a legal petition for liquidation, then the major reason for it is that it hasn’t been paid after the end of a legislative timeframe for payment. The court chooses a liquidator on ‘equitable and just grounds’ if it is certain that a director, key stakeholders, or shareholders, has a concern that the firm is either insolvent or is predicted to be insolvent.

Liquidator for a Bankrupt Firm

A liquidator protects, gathers, and releases the assets of a company. It evaluates the different activities of the company and any unfair preferences and reports the same to the creditors. Liquidators will watch out for all those reasons due to which a company failed.

It performs a thorough investigation about whether anyone has committed any offense and if there is a possibility that funds can be recovered to the creditors. A liquidator identifies and voids non-money-making transactions. It examines potential claims in contrast to the company’s officers and attempts to find out any unavoidable financial issues.

The law is enforced towards keeping asset distribution and Voluntary Receivership Services uniform. It gives priority to creditors who are charged over the property of the company as security.

The Liquidator is liable to pay for the liquidation costs. Subject to secured rights of creditors, proceeds are distributed to priority creditors, followed by unsecured creditors. Once the liquidation completes, the Liquidator assists the company to get deregistered.

The liquidator for a Solvent Company

Members can voluntarily choose to “wind up” or close a company. All accrued debts are generally paid.


With the right knowledge about liquidation, its early signs, types, and objectives help companies to prepare better to tackle this situation at present or in the future.

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