Section 496 — Corporations Act 2001: Duty of liquidator where company turns out to be insolvent

(1) Where a declaration has been made under section 494 and the liquidator is at any time of the opinion that the company will not be able to pay or provide for the payment of its debts in full within the period stated in the declaration, he or she must do one of the following as soon as practicable: (a) apply under section 459P for the company to be wound up in insolvency; (b) appoint an administrator of the company under section 436B; (c) convene a meeting of the company’s creditors;

and if he or she convenes such a meeting, the following subsections apply. (4) The liquidator must lay before the meeting a statement of the assets and liabilities of the company and the notice convening the meeting must draw the attention of the creditors to the right conferred upon them by subsection (5). (5) The creditors may, at the meeting convened under subsection (1), appoint some other person to be liquidator for the purpose of winding up the affairs and distributing the property of the company instead of the liquidator appointed by the company. (6) If the creditors appoint some other person under subsection (5), the winding up must thereafter proceed as if the winding up were a creditors’ voluntary winding up. (7) The liquidator or, if another person is appointed by the creditors to be liquidator, the person so appointed must, within 7 days after a meeting has been held pursuant to subsection (1), lodge a notice in the prescribed form. (8) After the meeting the winding up must proceed as if it were a creditors’ voluntary winding up. (9) An offence based on subsection (4), (5), (6), (7) or (8) is an offence of strict liability. Note: For strict liability, see section 6.1 of the Criminal Code.