Liquidators have a duty to act independently and in the best interests of the creditors of a company. However, frequently, a dispute with a liquidator may arise in relation to an apparent lack of independence, a proposed asset realization strategy or an intended action in respect of debt recovery. In view of this, new amendments to the Corporations Act 2001 (Cth) have made it easier for creditors to replace liquidators and have provided creditors with a range of other new powers.

Amended Laws for Replacing a Liquidator

Previously, creditors could only replace a liquidator appointed by the company at the first meeting of creditors or by application to the court.

However, in addition to granting other new powers, the amendments now enable creditors to request an appointed liquidator to call a meeting to consider their replacement at any time.

The Process for Replacing a Liquidator

To replace a liquidator, a resolution to that effect must be considered at a meeting of creditors and passed by a majority in both number and value of voting creditors.

Under the amendments, a liquidator must hold a meeting of creditors to consider their replacement in the following circumstances:

(a)   The creditors pass a resolution directing the liquidator to call a meeting; or

(b)   A creditor or creditors request the liquidator to call a meeting:

(i)         Within 20 business days of the liquidator’s appointment to a Creditor’s Voluntary Liquidation; or

(ii)        At any time if the creditor(s) represent at least 25 per cent of total creditors or 10 to 25% of total creditors and provide security for the cost of holding the meeting.

Apart from requesting the appointed liquidator to hold a meeting, creditors will also need a Consent to Act as well as a Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) from an alternative liquidator.

Other New Powers for Creditors

In addition to providing the process for replacing a liquidator, the new laws afford creditors with extensive powers including the ability to:

(a)   Request information, which the liquidator must provide within five business days so long as it is relevant to the liquidation, does not result in a breach of liquidator duties and is reasonable for the liquidator to provide; and

(b)   Engage a liquidator specifically to review the appointed liquidator’s remuneration approved within the preceding 6 months and/or an expense incurred by the appointed liquidator in the preceding 12 months.


Although the Corporations Act 2001 (Cth) now gives creditors substantial leeway to replace a liquidator, resorting to this step immediately may unduly increase costs. When responding to a dispute with a liquidator, it is best to utilize the new powers in a more structured way: by requesting particular information from the liquidator, considering the appointment of a reviewing liquidator and then discussing the liquidator’s replacement with other creditors.