FAQ’s

From 1 September 2020, all insolvency appointments including liquidations, receiverships, voluntary administrations and creditor compromises must be undertaken by a Licensed Insolvency Practitioner. The Insolvency Practitioners Regulation Act 2019 obtained royal assent on 17 June 2019 requiring insolvency practitioners that take appointments be licensed from 1 September 2020.

Practitioners that are already Accredited Insolvency Practitioners with CA ANZ and/or RITANZ will get an automatic temporary license on 1 September 2020. Licensed Insolvency Practitioners are subject to strict ethical standards and practice requirements that they are required to abide by as members of CA ANZ and RITANZ. You can check if a practitioner is licensed by clicking the following link – Insolvency Practitioners Register 

The two terms are often used interchangeably and usually in error. Liquidation is where the shareholder or creditor appoints a liquidator to control the company. Receivership is where a secured creditor, usually a bank or finance company, that has a security over the entire company (General Security Agreement or GSA) appoints a receiver to control the company.

Although liquidators and receivers have very similar duties, a receiver has a primary duty to the secured creditor that has appointed them. There are also some powers that are specifically available to liquidators only.

This is a legal demand for payment. You have 15 working days to pay or to enter into a formal compromise with your creditors. If you dispute it you must do so by filing a notice to set aside within 10 working days. Failing this the creditor that has served the Statutory Demand may apply to Court to put your company into liquidation.

This means you are a secured creditor. A GSA document will usually have certain rights and powers the secured creditor has when the debtor company defaults on its obligations. One of the powers usually allows the secured creditor to appoint a receiver to control the company. The receiver will then realise as much as they can to pay the secured creditor back.

A company can be put into liquidation a number of ways. The most common two ways are by the shareholder (voluntary liquidation) or by a creditor (court liquidation).

The liquidation will occur at the set date and time on the appointment document. From then on the liquidator is in control of the business. They have duties under the Companies Act 1993 as to their role and responsibilities. In summary, they are tasked with realising as much money as possible from the company to pay back to its creditors.

The funds realised by the liquidator is distributed according to Schedule 7 of The Companies Act 1993. This schedule sets out the order of priority in which funds must be distributed from the liquidation.

This means you are a creditor in the liquidation. You should complete a proof of debt form to register your claim. Make sure you attach all relevant documentation to prove your claim. Filing a claim in the liquidation does not necessarily mean you will get your money back. This will depend what is recovered during the liquidation.

If you have a personal guarantee then now may be a good time to look at options to enforce this.

Yes. As an employee you are what is called a preferential creditor which means you should get a distribution before other creditors. However, this is subject to the what assets have been realised and whether there are other competing priorities.

No. Your company and you are two separate legal entities. Therefore, any debts that relate to the company stay with the company. However, if any creditors have a personal guarantee from you, they may choose to enforce that against you and force you into bankruptcy if you can’t pay it.

This will very much depend on the facts in your situation. It does not automatically mean you will need to pay money back. It depends if you have any defenses that you can rely on. Contact us to see how we can help you.

The sooner you seek help and know your options the more chances you will have of a favourable outcome. Leaving things right to the end will likely lead to your company being put into liquidation or receivership. We can help you with understanding your options before it is too late.