The information in these FAQs is a summary only, providing basic information about the simplified liquidation process. It does not cover all the relevant law regarding this topic, and is not a substitute for professional advice.
You should also note that because these FAQs avoid using legal language wherever possible, they may include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your circumstances should be taken into account when determining how the law applies to you.
If you need help to understand the simplified liquidation process, you should consider engaging a suitably qualified adviser, such as a financial counsellor, accountant, lawyer or registered liquidator.
A simplified liquidation process is a streamlined creditors’ voluntary winding up for companies that have liabilities less than $1 million.
It applies only to a creditors’ voluntary winding up of a company where the event that triggers the start of the winding up occurs on or after 1 January 2021.
To be eligible for the simplified liquidation process:
The liquidator in the creditors’ voluntary winding up may adopt the simplified liquidation process if:
The liquidator must not adopt the simplified liquidation process if, before the liquidator adopts the simplified liquidation process, more than 25% in value of creditors provide a written statement to the liquidator requesting the liquidator not to follow the simplified liquidation process.
The liquidator must cease to follow the simplified liquidation process if:
Meetings of creditors are not held in a simplified liquidation process. Matters determined by creditors are decided without a meeting via the ‘proposal without a meeting process’.
Also, creditors cannot form a committee of inspection.
A liquidator in a simplified liquidation must report to creditors within three months of the liquidator’s appointment, about:
There are no other mandatory reports to creditors.
Creditors in a simplified liquidation process can make reasonable requests for information from the liquidator.
If funds will be available to pay a dividend to creditors, the liquidator is only able to make one dividend payment. This is likely to be near the end of the administration and there is no ability to make an interim dividend distribution.
The liquidator in a simplified liquidation process is required to report alleged misconduct to ASIC if:
