Corporations Act 2001
If a company experiences financial problems, the directors may appoint an administrator to take over the operations of the company to see if the company ' s creditors and the company can work out a solution to the company ' s problems.
If the company ' s creditors and the company cannot agree, the company may be wound up (see 12.3).
[ Part 5.3A ]12.2 Receivers.
A receiver, or receiver and manager, may be appointed by order of a Court or under an agreement with a secured creditor to take over some or all of the assets of a company. Generally this would occur if the company is in financial difficulty. A receiver may be appointed, for example, because an amount owed to a secured creditor is overdue.
[ Part 5.2 ]12.3 Winding up and distribution.
A company may be wound up by order of a Court, or voluntarily if the shareholders of the company pass a special resolution to do so.
A liquidator is appointed:
· when a Court orders a company to be wound up; or
· the shareholders of a company pass a resolution to wind up the company. 12.4 Liquidators.
A liquidator is appointed to administer the winding up of a company. The liquidator ' s main functions are:
· to take possession of the company ' s assets; and
· to determine debts owed by the company and pay the company ' s creditors; and
· to distribute to shareholders any assets of the company left over after paying creditors (any distribution to shareholders is made according to the rights attaching to their shares); and
· finally, to have the company deregistered. 12.5 Order of payment of debts.
Generally, creditors who hold security interests in company assets are paid first.12.6 Cancellation of registration.
If a company has ceased trading or has been wound up, it remains on the register until ASIC cancels the company ' s registration. Once a company is deregistered, it ceases to exist.
[ CCH Note: Pt 1.5, para 12.6 will be amended by No 69 of 2020, s 3, Sch 1, by substituting the heading and " the Registrar deregisters the company " for " ASIC cancels the company ' s registration " , (effective 22 June 2022 or a day or days to be fixed by Proclamation). The heading will read:
12.6 Deregistration of a company ]