Liquidation
The winding up of a company: its assets are sold and the proceeds paid to creditors in a fixed order.
Secured creditors are paid from their collateral first, then employees, then unsecured creditors share what is left. ASIC's reports show that in around 96 per cent of liquidations the estimated return to unsecured creditors is less than 11 cents in the dollar.
Related terms
- Voluntary administration — A process where an independent administrator takes control of an insolvent company to decide its future.
- Unsecured creditor — A creditor with no security interest over the debtor's property, paid last in an insolvency.
- Proof of debt — The form a creditor lodges with an administrator or liquidator to claim what it is owed.
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