Winding up an insolvent company
If you think your company is in financial difficulty, get professional advice as soon as possible. This gives your company the best chance of surviving and avoiding further debt.
If your company is insolvent, don’t wait to act. Unless you quickly get funding to make the company viable, you will need to appoint a voluntary administrator or a liquidator.
- What happens if my company is insolvent?
- Voluntary administration
- What happens if I don't wind up my company?
While insolvent, a company must not trade or continue conducting business as usual. Trading while insolvent can result in civil penalties or criminal charges under the Corporations Act.
This means that you need be aware of your company's financial position.
Voluntary administration tries to resolve the company's insolvency in the best way possible. A qualified person (they must be a registered liquidator) is appointed as voluntary administrator to try and bring the company back to solvency.
If it's not possible to save the company, then the voluntary administrator's job is to decide the best course of action. This can lead to a better return than if the company was put into liquidation.
How to appoint a voluntary administrator
A company may appoint an administrator if the directors resolve that the company is insolvent. They can also appoint if they think it will become insolvent soon.
We recommend getting advice from an insolvency professional for guidance.
Liquidation involves a registered liquidator taking control of the insolvent company. The liquidator has an obligation to ensure that creditors are treated fairly as part of the liquidation.
How to appoint a liquidator
We recommend getting advice from an insolvency practitioner on appointing a liquidator. They can advise on your company's situation and the potential costs.
If an insolvent company is not voluntarily wound up, a creditor of the company can apply to the court to wind up the company and appoint a liquidator.
You cannot request that we wind up the company. However, we may start deregistration of the company. For more information about when we may deregister a company, see ASIC initiated deregistration of a company.
A director's personal bankruptcy is not related to a company's solvency. If you are bankrupt, you are disqualified from managing a company under the Corporations Act 2001.
If you believe your former company may be insolvent, see an insolvency practitioner. They can provide advice on the company's situation and the available options.