ARTICLE · 23 NOVEMBER 2011

Voluntary administration or liquidation – what's the difference?

Colin Biggers & Paisley

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Voluntary administration or assessing a company's viability, is not the same as liquidation, winding up a company.

AustraliaInsolvency/Bankruptcy/Re-Structuring

In brief – Voluntary administration is not the same as liquidation

The purpose of liquidation is to wind up a company, whereas the purpose of voluntary administration is to assess the company's viability, turn its fortunes around if possible and provide a better return to creditors if not.

What does it mean if a company is in liquidation?

We all know that when a company is in liquidation, you are not going to be doing much business with them. A company in liquidation it is in its terminal stage.

If you are a secured creditor, you would be looking to your securities. If you are an unsecured creditor, you would be looking to your bottom line, including what, if any, retention of title clauses or guarantees you might have.

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