Frequently Asked Questions

The meaning of ‘liquidation’

Liquidation is a legal state for a company and commences with the appointment of a liquidator. It is the process where the assets of a company that cannot pay its debts, are realised in an orderly manner and distributed to the creditors by a liquidator in accordance with the various securities and priorities as set out in the legislation.

What is company liquidation?

A company is placed into liquidation when it is unable to pay its debts (insolvent liquidations) or when it has come to the end of its natural life (solvent liquidations). This can be done voluntarily by the shareholders resolution or by a Court order.

A liquidator is appointed to investigate the company’s financial affairs, establish the reason why the company failed, investigate possible offences, and identify and sell any assets to help repay creditors. Officers of the company must assist the liquidator by providing information and answering questions.

Accountants and solicitors can help provide information about options for insolvent companies.

The liquidation process

All liquidations will vary as they are dependent on a number of circumstances. For example, the company’s financial affairs, the reasons why the company failed, possible offences, the amount or value of the company assets and more. However generally:

Step One: The company is unable to repay its debt to its creditors.

Step Two: The decision is made by either the company itself or its creditors that it is going to be put into liquidation. This can be done by one of the following:

A Court Order - this application is made though the court by a creditor, the company director/s, the company shareholder/s, an administrator or the Registrar of Companies.
A resolution for voluntary liquidation - this is passed by the company shareholders or as a Board (as outlined within the company’s constitution).
A creditor’s resolution - this is passed by the creditors at a watershed meeting. (see voluntary administration).

Step Three: A liquidator is nominated and appointed.

Step Four: The appointed liquidator notifies the Companies Office.

Step Five: The liquidation is advertised to the public in the local newspaper.

Step Six: The liquidator takes custody and control of the company’s assets.

Step Seven: The liquidator sends to the creditors a report into the administration of the liquidation setting out his preliminary findings and calling (or dispensing with) a meeting of creditors.

Step Eight: The administration of the liquidation continues. This may include the following things;

the assets of the company being identified, both tangible and intangible
realisation of the assets
collection of company records
identifying all creditors
receiving claims from creditors and payments being made to creditors (dividends).

Step Nine: Ongoing reports are sent to creditors.

Step Ten: Completion of administration.

The final report is sent to creditors and the New Zealand Companies Office is notified of the liquidation completion. This leads to the company being removed from the companies register.

How do I lodge a claim in the liquidation?

If you go to our Useful Forms page, you can find the relevant claim form and lodge your claim as outlined there.

Where can I get a copy of the Liquidators/Receivers Reports?