What is the effect of liquidation on company creditors?

Once a company is in liquidation, unsecured creditors cannot start or continue legal proceedings against the company or its property, or start or continue to enforce rights against any property of the company, unless they have permission from the Court or the Official Assignee.

Secured creditors can enforce securities where the company is in default. Liquidation is usually treated as default.

Secured creditors can uplift and sell any company assets over which they have security. When a secured creditor sells the security, they become an unsecured creditor for any shortfall.

If there is a surplus, it must be paid to the Official Assignee for the benefit of all creditors.