Should the company meet certain eligibility criteria, a liquidator may adopt the simplified liquidation process rather than the standard liquidation appointment.
The criteria are:
the company has passed a special resolution that the company be wound up voluntarily;
the directors give the liquidator a report concerning the company’s affairs and a declaration that the company will be eligible for the simplified liquidation process;
the company is insolvent;
the company’s total liabilities do not exceed $1 million;
no director has been a director of a company that has previously used the simplified liquidation process or a debt restructuring process; and
the company’s tax lodgments are up to date.
If the company is eligible, a simplified liquidation appointment is different to standard liquidation appointment through:
Reduced investigation and reporting requirements. The requirement to provide a report on offences to the Australian Securities and Investments Commission (ASIC) is removed.
Reduced meetings. The obligation for liquidators to convene meetings is removed.
Removed Committees of Inspections. Creditors may no longer appoint a committee of inspection, which is currently used to advise and assist the external administrator and can approve and request certain aspects of the liquidation process.
No Reviewing Liquidators. Creditors may no longer appoint a reviewing liquidator to review the incumbent’s remuneration.
Fewer voidable transactions. The liquidator cannot claw back unfair preference payments from creditors not related to the company.
Simplified dividend process. The process of creditors lodging a claim (proof of debt) and dividend payment is simplified.