Simplified liquidations and changes to liquidator preference payments Henry McKenna MICM Director Vincents Insolvency & Reconstruction
Simplified Liquidations
Creditors in a Simplified Liquidation can still make
Simplified Liquidations came into effect from
liquidator.
reasonable requests for information from the
1 January 2021, although from looking at recent ASIC statistics, it appears that less than one
If funds will be available to pay a dividend to
percent (1%) of Creditors’ Voluntary Liquidations
creditors, the liquidator is only able to make one
are adopting the streamlined process – most likely
dividend payment. This is likely to be near the
because they don’t meet the eligibility criteria
end of the administration and there is no ability to
(which is outlined further below).
make an interim dividend distribution.
What is a Simplified Liquidation?
The liquidator in a Simplified Liquidation is
How is the Simplified Liquidation process different
still required to report alleged misconduct to
to a full creditors’ voluntary winding up?
ASIC if:
Meetings of creditors are not held in a Simplified Liquidation. Matters determined by creditors are decided without a meeting via the ‘proposal without a meeting process’. Also, creditors cannot form a committee of inspection.
z in the opinion of the liquidator, there are reasonable grounds to believe conduct constituting an offence under a law of the Commonwealth or a State or Territory in relation to the company may have occurred; and
A liquidator in a Streamlined Liquidation must
z that conduct has, or is likely to have, a material
report to creditors within three months of the
adverse effect on the interests of creditors as a
liquidator’s appointment, about:
whole or a class of creditors as a whole.
z any work performed to date by the liquidator; z the liquidator’s opinion on when the liquidation may be finalised; and z the likelihood of a dividend being paid to creditors. There are no other mandatory reports to creditors
Importantly for AICM members, in a Simplified Liquidation, unfair preference recoveries by liquidators, from non-related entities are limited to claims greater than $30,000 that occur 3 months prior to the relation back day (usually the date of
and the report that is sent has far less detail than
appointment). Previously there was no minimum
in a standard liquidation.
and the time frame was 6 months. AICM Risk Report 2022
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