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Unit 9: Fundamentals of Liquidation of Companies

The liquidator will continue to exercise all powers, but power will be exercisable subject to any notes
restriction or conditions laid down by the court. Such type of winding up is comparatively rare.



Caselet the regional services company

he business of the company operated as an earthmoving equipment importer and
on seller, as well as completing contracted earthmoving tasks in the Bendigo and
TRegional areas.
Upon our appointment we immediately located the company’s contact details and
made brief contact with the director. The director initially refused to speak with us. So
we then attended the principle place of business as per the Australian Securities and
Investments Commission (“ASIC”) database, in Bendigo, Victoria to investigate the affairs
of the company and secure any assets. Whilst in Bendigo we also located the company’s
accountant via the registered office who was able to provide assistance and open a dialog
with the director. We note that we were unable to locate the director in the initial stages,
however, with ASIC’s and the company’s accountant assistance we were able to locate and
question the director.
We note that our initial investigations identified some of the items of earthmoving plant
and equipment were located at a Melbourne based plant and equipment auctioneer and
we were able to secure these assets for the benefit of creditors. Further, we note the director
advised that the former director, and former partner in the business, had possession of a
leased company vehicle (no equity was determined in the vehicle) had claimed to be in
satisfaction of a director’s loan account, which was recovered for the benefit of ordinary
unsecured creditors, as it reduced the claim of the lessor. The return to the creditors in this
administration was approximately 52 cents in the dollar.

Source: http://www.brookebird.com.au/index.php?option=com_content&task=view&id=43
self assessment

Fill in the blanks:
3. A limited company can be liquidated by any of................................... ways.
4. A creditors for ` 5,000 holding a charge on the machinery of the book value ` 7,000 (market
value ` 4,500) will be called....................................
5. Deficiency/Surplus Account is prepared as per...................................

9.3 important terms

Some important terms are as follows:
Liquidator: In the case of voluntary liquidation by members, a liquidator is appointed by passing
a resolution in the general meeting of the company, and in the case of winding up by creditors
he is appointed in the meeting of creditors and his remuneration is also fixed in the meeting. The
appointment of a liquidator is to realise the various assets and making the various payment of
the liabilities. He also has to conduct the legal proceedings of the winding up of the company. In
case of compulsory winding up, the official liquidator attached to each High Court is appointed
liquidator by the Central Government after the winding up order is passed. The official liquidator
has to perform the winding up proceedings under the supervision and control of the court which
has made the order for winding up. The company prepares its Statement of Affairs which is

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