How much does liquidation cost?
Short answer
A simple creditors' voluntary liquidation of a small company with few assets is commonly quoted at around $10,000 to $20,000 plus GST, based on published fee guides from registered liquidators. Where the company has nothing to sell, the director usually pays that up front. Assets to realise, many creditors, disputes or investigations push it higher, sometimes far higher. The process is described in liquidation and ATO debt.
What you are paying for
A liquidator is a registered professional who must do a fixed set of work whatever the size of the company: take control, notify creditors and ASIC, collect and sell assets, work out employee entitlements, investigate the directors' conduct, report to creditors and ASIC, and finally deregister the company. Most liquidators charge time costs at hourly rates, and some quote a fixed fee for a straightforward matter. The bill has three parts: the liquidator's remuneration, disbursements such as advertising, postage and valuations, and ASIC lodgement fees.
In a creditors' voluntary liquidation the liquidator's fees must be approved by the creditors, so a liquidator cannot simply charge what they like. If creditors refuse, the liquidator can ask the court.
Who actually pays
- The company's assets first. Liquidator's costs rank ahead of everyone else, including employees and the ATO. If there are assets worth more than the fees, the director pays nothing personally.
- The director, if there are no assets. A liquidator will not take an appointment that cannot be funded, so for an assetless company they ask the director for an up front payment or a personal undertaking. That is the $10,000 to $20,000 figure people are usually quoting.
- Nobody, in a court liquidation. If the ATO or another creditor obtains a winding up order, the applicant pays the court costs and the liquidator relies on assets or ASIC's fund for assetless investigations. That sounds free, but you lose the choice of liquidator and the timing, and it does nothing to protect you from a director penalty notice unless it lands inside the 21 day window.
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What moves the price up or down
| Cheaper | More expensive |
|---|---|
| Books and records complete and handed over | Records missing, so the liquidator reconstructs them |
| Few creditors, mostly the ATO | Dozens of creditors, disputed claims |
| No employees, or entitlements already paid | Staff owed wages, leave and super, and a Fair Entitlements Guarantee claim to process |
| No assets, or assets that sell easily | Vehicles, stock, property, leases and finance to untangle |
| Director cooperates and answers quickly | Director unresponsive, or transactions that need investigating |
| Eligible for simplified liquidation (liabilities under $1 million) | Full liquidation with creditor meetings and reports |
Simplified liquidation, available to companies with liabilities under $1 million and lodgements up to date, strips out some reporting and meeting steps and is usually cheaper. It is worth asking about. If the business itself is worth saving, compare the price of closing it with the price of keeping it: how much does small business restructuring cost gives the equivalent figures, and SBR versus liquidation sets out the trade-offs.
GET MORE THAN ONE QUOTE
Fees vary between firms for the same job. Ask two or three registered liquidators for a written estimate, what it includes, and what would cause it to rise. Check they are on ASIC's register of registered liquidators before paying anyone.
What to do next
- Gather the company's last financial statements, bank statements, creditor list and ATO account balance so a liquidator can quote accurately.
- Ask at least two registered liquidators for a written fee estimate and whether the company qualifies for simplified liquidation.
- Before paying anything, confirm whether a director penalty notice has been issued and whether liquidating now would remit it.
Related questions
Can I liquidate a company with no money at all?
Yes, but someone has to fund it. Liquidators usually ask the director for an up front contribution when the company has no assets. If you cannot pay and the company simply stops, a creditor such as the ATO may eventually apply to wind it up through the court, or ASIC may deregister it for unpaid fees. Neither route protects you from a director penalty notice.
Is the liquidator's fee tax deductible for me personally?
Generally no. A contribution a director pays to fund the liquidation of their company is usually treated as a capital or private outlay rather than a deductible expense of earning income. Ask your accountant about your own circumstances before assuming any deduction.
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