2. Before we start we should look at exactly what a
Liquidation of Company does. The following points cover the main
activities.
• Investigate the financial affairs of the company focusing on
suspicious transactions;
• report to creditors;
• report to ASIC;
• recover money where appropriate, for example from trade
debtors;
• search out the assets of the company and keep them safe;
• convert those assets to cash;
• distribute funds to creditors;
• distribute surplus funds to shareholders; and
• submit a company de-registration application.
3. Experience
Being in business for a long time may not necessarily be a reliable
indicator that a particular company has the right experience for a
given situation. Some questions to ask are: what type of liquidations
have been carried out in the past and what was the size and
complexity of the companies involved? For example, a liquidator
experienced in the liquidation of businesses in the SME sector may
not always be a good match for one that focuses on billion dollar
companies and vice versa.
4. Reputation
Examining the evidence of the reputation that a company has
earned is potentially the best way to judge the quality of a business.
Conducting your own due diligence is a good way to avoid
unpleasant surprises. Ask ASIC if there are complaints registered
for liquidators you are considering. Any serious complaints against
a liquidator will be lodged with ASIC. Ask for the names and contact
details for references? Ask how long have they been operating?
5. Specialty
Establish your precise needs and then choose a liquidator that
understands your unique situation. Everyone is good at something
but no one can be good at everything.
Training
In order to be an effective liquidator there are numerous legal,
accounting and negotiation skills that a person simply must have.
Training goes along side experience so don't just presume that a
potential liquidator has sufficient knowledge. Get them to
demonstrate it to you.
6. Communication
If your liquidator makes communication difficult it will make what
can be a stressful time even worse. Ask upfront what you should
expect in terms of the level of communication and access. Also take
note in your initial discussions and observe the interpersonal skills
that are exhibited. Do you get a sense that they will tell it like it is or
just fluff around the edges making it difficult to arrive at quick clear
decisions? Does the liquidator come across as a tough negotiator or
a bit of a soft touch? Do they listen or do they push forward with
their own preconceived notions and ideas?
7. Summary
The process that liquidation companies implement is designed to
provide the best possible financial outcome for the creditors.
Whether the ideal outcome will be achieved is totally dependent on
the skill of the liquidator. Do your homework, ask lots of questions
before making the appointment.
