Frequently Asked Questions

Please allow us to share with you the answers to some questions we are frequently asked:

One of my customers has gone into liquidation. How can I get paid what they owe me? Will the liquidator contact me?


When a company becomes insolvent a liquidator is appointed to attempt to sell their assets and use the proceeds to repay their creditors. The directors may also be required to contribute from their personal assets.


Winding up the affairs of an insolvent company can take some time, depending on the circumstances. For example, legal action is often required to find and recover the company’s assets. Depending on the funds available you may only receive a percentage of what is owed to you (eg. 25c per $1). Generally, liquidator’s fees, government charges and payments to the secured creditors such as banks will receive priority over unsecured creditors.


The liquidator will generally calculate your claim by formally requesting ‘proof of debt’ from you. If the liquidation is entered into by the company voluntarily then the liquidator must hold a meeting of creditors within 11 days, however if the liquidation was commenced via court order then the liquidator has no formal responsibility to contact creditors or hold a creditors’ meeting. Regardless, the liquidators can only contact known creditors and unless the company has maintained good records then they may not be aware that you are owed money.


Individuals and companies with receivables from companies in liquidation are encouraged to contact the liquidator to ensure that their details are recorded.

If the bank has taken over a company that owes me money will they then pay me what I am owed?


As a condition of lending money a bank will usually obtain a security over the company’s assets, like a mortgage. This means they are a secured creditor. If the company then fails to meet their obligations then the secured creditor can appoint a receiver. The receiver’s responsibility is to sell the secured assets in order to recoup the money that was lent. The receiver has no responsibility to pay debts owed to unsecured creditors. If unsecured creditors want payment they need to make a request to liquidate the company through the courts.

If their company is insolvent then why is the director still driving a BMW?


If a business is trading as a limited liability company then it is a separate entity to its owners and directors and they are not personally liable for the company’s debts.


There are however, two circumstances under which directors can be personally liable: if they have given a creditor a ‘personal guarantee’ that they will pay the company’s liabilities – banks will often require this before providing finance, or if the directors have broken the law. For example, a key area that liquidators will investigate is whether the company has traded whilst insolvent and if found to be the case then the directors will usually have a personal liability for the debts.


Unless the liquidators find a reason for the directors to be personally liable the liquidator and creditors have no basis for a claim on their personal assets.

Why was the liquidator paid but not the creditors?


Insolvency by definition reflects the fact that a company is not able to pay back all that they owe. When a liquidator takes on an engagement they have no debts to the company, but must take on considerable responsibility under the law and utilise their highly-specialised technical skills for the benefit of others. These responsibilities include locating the company’s assets, obtaining information from the directors and creditors and reporting on breaches of the law to ensure that creditors are returned as much as possible of what they are owed. However, if liquidators were not reimbursed for their work then they would not be able to provide these services and so insolvency laws in Australia have placed payment to liquidators as a high priority in the order in which stakeholders are paid. 

How can I check if a company has gone into liquidation? 


All appointments of external administrators, including liquidators, administrators and receivers, can be viewed for free in the Insolvency Notices section of the ASIC website:


More detailed information on a company’s status can be obtained by undertaking a company search of the ASIC company register, however this service incurs a fee. More details can be obtained on the ASIC Connect website:               


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Bruce Mulvaney & Co​


Tel: (03) 9896 9000
Mob: 0418 848 212

Fax: (03) 9896 9001

Email Bruce Mulvaney

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Hawthorn, Vic, 3122

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