What is a liquidating dividend

The three types of liquidation are: A creditors' voluntary liquidation is a liquidation initiated by the company.

Creditors' meetings during liquidation Voting at a creditors’ meeting How will I get paid in a liquidation? It involves realising the company’s assets, cessation or sale of its operations, distributing the proceeds of realisation among its creditors and distributing any surplus among its shareholders.

Information sheets A liquidation is the orderly winding up of a company’s affairs.

When a company is being liquidated because it is insolvent, the liquidator has a duty to all the company’s creditors.The liquidator’s role is to: Except for lodging documents and reports required under the Corporations Act, a liquidator is not required to do any work unless there are enough assets to pay their costs.If the company is without sufficient assets, one or more creditors may agree to reimburse a liquidator’s costs and expenses of taking action to recover further assets for the benefit of creditors.In this case, if additional assets are recovered, the liquidator or particular creditor can apply to the court for the creditor to be compensated for the risk involved in funding the liquidator’s recovery action.If a liquidator suspects that people involved with the company may have committed offences and the liquidator reports this to ASIC, the liquidator may also be able to apply to ASIC for funding under the Assetless Administration Fund to carry out a further investigation into the allegations.

A liquidator may call a creditors’ meeting from time to time to inform creditors of the progress of the liquidation, to find out their wishes on a particular matter or seek approval of the liquidator’s fees.

You may also use a creditors’ meeting to ask questions about the liquidation and inform the liquidator about your knowledge of the company’s affairs.

In a court liquidation, the liquidator is not required to call a creditors’ meeting unless a matter requires creditor approval or creditors pass a resolution requiring a creditors’ meeting to be called, or at least one-tenth in value of all the creditors request the liquidator in writing to do so.

In a creditors’ voluntary liquidation, the liquidator may choose to hold an annual meeting of the creditors or lodge a report with ASIC on the progress in the administration.

If they choose not to hold the meeting, the liquidator must tell creditors that the report has been prepared and give them a copy free of charge if asked.

The report must set out: The liquidator in a creditors’ voluntary winding up must also hold a joint meeting of the creditors and members at the end of the winding up.