What a liquidator's statutory report tells you, and what it does not

Within three months of appointment, a liquidator must send creditors a statutory report.¹ It sets out what the liquidator has found about the company's affairs, what assets there are, what is owed and to whom, and whether creditors can expect anything back. For most companies it is the only formal account of the collapse that will ever be written.

What goes in it

The rules require an estimate of the company's assets and liabilities, the causes of the failure as the liquidator sees them, the investigations carried out so far, the likely return to each class of creditor, and any recovery actions the liquidator is considering.¹ Creditors get the report, and a summary is lodged with ASIC.

Where the liquidator suspects offences by officers, a separate report goes to ASIC under section 533 of the Corporations Act.³ That report is not sent to creditors.

Where the information comes from

From the company's books, from the directors' report on company activities and property, from bank records, and from the liquidator's own inquiries.² The report is only as good as the records handed over. If those records were kept by one party to a dispute, or if a former director could not access them when asked to complete their own report, the statutory report inherits those gaps and does not always say so.

Who pays

Liquidators are paid from the company's assets. Where there are none, an applicant or creditor can indemnify the liquidator's costs. An indemnity does not change the liquidator's duties, which are owed to all creditors and to the court, but it is a fact about the appointment that a careful reader notes, along with who nominated the liquidator in the first place.²

What it is not

It is not a court finding. Nobody cross-examines the report. A creditor who disagrees can raise it at a meeting, ask the liquidator for further information under the practice rules, or apply to the court, but the report itself stands as the liquidator's opinion.¹

It is not a complete account of the business. It describes debts as they stood on the day the liquidation began, and on that day every advance payment and every unperformed contract became a claim. A large figure for total debts can describe a company that was trading normally the week before.

How to read one

Read the causes of failure section with the question: what records is this based on, and who kept them. Read the creditors table by class, separating employee entitlements, customer refunds and accelerated leases from trade debts that existed before the winding up. Then read the section on the liquidator's own fees.