Liquidation Auctions in Australia

When a business faces insolvency, a liquidation auction can be a way to sell off assets and pay off creditors. This part of the ASIC law is designed specifically for struggling small businesses as a faster, low-cost way to wind up an insolvent company. But what can companies expect to happen, and how will the liquidator proceed with the auction of their assets?

The liquidator’s role in a liquidation auction is to realise the maximum value of the assets to pay off creditors. The assets are usually sold through a public auction, open to the public, and the bidding process can be competitive.

There are two types of liquidation auctions in Australia:

• Onsite auctions – where the assets are sold on the company’s premises, allowing potential buyers to inspect the inventory.
• Online auctions are where assets are sold through an online platform, and potential buyers can bid on items remotely.

The liquidator will prepare an inventory of assets to be sold at the auction and set a reserve price for each item. The reserve price is the minimum price that the item can be sold for, and if the reserve price is not met, the item will not be sold.

Once the auction has concluded, the liquidator will use the proceeds to pay off creditors. The liquidator will distribute any additional funds to the company’s shareholders in accordance with the Corporations Act’s priority guidelines.

It’s important to note that during the liquidation process, there may be restrictions on the sale of assets, particularly if the assets are subject to security interests. At the Liquidation Advisory Centre, our team will ensure that all legal requirements are met and that the sale of assets is conducted fairly and transparently for all parties.