What is Simplified Liquidation?

What is simplified liquidation?

Simplified liquidation is part of a recent ASIC law designed specifically for struggling small businesses as a faster, low-cost way to wind up an insolvent company.

Simply put, it’s when you stop your business, sell all its assets and distribute the money to creditors according to a set order prescribed by law. It is a streamlined version of the Creditor’s Voluntary Liquidation (CVL) and is specifically for companies with less than $1 million in debt.

Meetings of creditors are not held in a simplified liquidation process, and creditors cannot form a committee of inspection. Instead, a liquidator must report to creditors within three months of their appointment when the liquidation is going to be finalised and the likelihood of a dividend being paid.

What are the eligibility criteria for simplified liquidation?

In order to be eligible for simplified liquidation, your company must have $1 million or less in liabilities. It only applies if the event that triggered the start of the winding up occurred on or after the 1st of January 2021.

In addition, to be eligible, the company:

• Is not able to pay its debts in full within 12 months
• Has not undergone restructuring or been the subject of a simplified liquidation process in the past seven years
• Ensures that all of its tax lodgements are up to date

To find out if your business meets the criteria for simplified liquidation, we encourage you to get in touch with our highly qualified team of registered liquidators.

What are the benefits?

The benefits of simplified liquidation are that it allows you to protect your personal assets from being taken by your creditors. You can also expect faster turnaround times, lower costs associated with the process and greater certainty about when the process will end.

These factors make it an attractive option for many struggling businesses looking for ways to get back on track quickly and easily.

Help is at Hand  

“Our clients come to us because we approach their needs uniquely, looking at every detail of the business to find workable solutions to financial hardship and debt that are tailored specifically to their situation. If you want more information about how Simplified Liquidation works or want to find out if this option might be right for you, our team can help you. It’s not just about the numbers. We understand what you’re going through and want to provide your business with the help it needs.”