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Creditors Voluntary Liquidation

In the situation where directors of a company have formed the opinion that the company is insolvent, they have the option of starting a Creditors Voluntary Liquidation. The Directors will call an extraordinary general meeting of the company for shareholders to pass a Special Resolution to wind up the company and to nominate a liquidator. A meeting of creditors is called for 11 to 18 days later and the creditors by ordinarily resolution can appoint a liquidator of their own choosing.

The process of the winding up once the liquidator has been appointed is similar to that of a Court Liquidation. The liquidator’s role is to realise the assets of the company and to distribute those proceeds in accordance with the provisions of the Corporations Act.

Recent amendments to the Corporations Act have made it possible to appointment a liquidator very quickly and so Creditors Voluntary Liquidation are now much more common.