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CORPORATIONS ACT 2001

CHAPTER 1 - INTRODUCTORY  

PART 1.5 - SMALL BUSINESS GUIDE    View history reference

12  Companies in financial trouble  

12.1  Voluntary administration.  


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.

[Parts 5.4, 5.4B, 5.5]

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.

[Parts 5.4B, 5.6]

12.5  Order of payment of debts.  

 View history reference

Generally, creditors who hold security interests in company assets are paid first.

[Division 6 of Part 5.6]

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.

[sections 601AA-601AB, 601AH]


 



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