Cost is one of the first questions directors ask when they are considering liquidation — and it is a completely reasonable one. The answer depends on several factors, but the good news is that liquidation fees are often lower than people expect, and in many cases are funded from the company’s own assets rather than from the directors personally.
This article explains how liquidation costs work in New Zealand, what affects the total fee, who is responsible for paying it, and what you can expect when you engage Fixity.
The Two Main Types of Liquidation in New Zealand
Before discussing cost, it helps to understand that there are two main types of liquidation — and the cost profile of each is quite different.
Voluntary liquidation (also called members’ voluntary or creditors’ voluntary)
This is where the company’s shareholders resolve to appoint a liquidator. A voluntary liquidation is typically faster, less adversarial, and less expensive than a court-ordered liquidation because the process is orderly and the liquidator is chosen by the directors and shareholders rather than imposed by the court.
Court-ordered (compulsory) liquidation
This is where a creditor — including IRD — applies to the High Court to have the company wound up. The court appoints the liquidator, the process is more formal, and costs tend to be higher. Importantly, court liquidation is almost always more expensive and more disruptive than the voluntary equivalent. If liquidation is likely, acting proactively is almost always in your interests.
What Are the Main Cost Components?
Liquidator’s fees
The liquidator’s professional fees are the largest component of the cost. These are typically charged at an hourly rate, and the total depends on how complex the liquidation is — the number of creditors, whether there are assets to realise, whether there are investigations required into director conduct or insolvent transactions, and whether litigation is necessary.
For a straightforward voluntary liquidation of a small company with no assets and no complications, professional fees can be modest. For a larger or more complex insolvency — with property, multiple creditors, employee claims, or disputed transactions — fees will be higher.
Disbursements and filing costs
Liquidators also incur disbursements — out-of-pocket costs such as Companies Office filing fees, advertising costs (required by law), postage, and the cost of any specialist reports or valuations. These are typically a small component of the total.
Legal costs
If the liquidation involves litigation — for example, pursuing a debtor, defending a claim, or applying to the court to claw back an insolvent transaction — legal costs will be incurred. Not every liquidation involves litigation.
Who Pays the Liquidator’s Fees?
This is where many directors are pleasantly surprised. In most liquidations, the liquidator’s fees are paid from the company’s assets — not by the directors personally.
The liquidator collects and realises whatever assets the company has (cash, equipment, debtors, stock, intellectual property) and distributes the proceeds to creditors in a statutory order of priority. Liquidator fees are treated as a first-ranking cost of the liquidation, meaning they are paid before unsecured creditors receive anything.
If the company has no assets at all, the question of how fees are funded becomes more complex. In this situation, options include:
- The directors or shareholders may agree to fund the liquidation (this can be in everyone’s interests to achieve an orderly wind-up rather than an abandoned company).
- The liquidator may accept the appointment on a no-asset basis, knowing that recoveries — such as claw-back claims — may generate fees.
- IRD or another creditor may fund the liquidation if they believe there are recoveries available.
What Factors Make a Liquidation More or Less Expensive?
The key drivers of cost in a liquidation are:
- Complexity of the company’s affairs — the more creditors, employees, contracts, and assets involved, the more work required.
- Whether there are assets to realise — realising property, equipment, or debtors takes time and expertise.
- Whether investigation is required — if there is potential director misconduct, insolvent transactions, or fraud to investigate, this adds significant cost.
- Whether there are disputes — creditor disputes, employee claims, or litigation all add to the time involved.
- Whether records are complete — poor record-keeping forces the liquidator to reconstruct the company’s affairs, which takes considerably more time.
- How cooperative the directors are — liquidations where directors engage openly and provide records promptly are materially cheaper than those where information must be compelled.
Can I Get a Cost Estimate Before Appointing a Liquidator?
Yes — and you should. A reputable liquidator will give you a clear view of likely costs before you appoint them, based on an initial assessment of the company’s affairs. At Fixity, we provide transparent fee guidance from the outset. We do not believe in surprises.
We offer a free initial consultation to understand your company’s position. From that conversation, we can usually give you a realistic range of what the liquidation is likely to cost and how those costs will be funded.
Is There a Cheaper Alternative to Liquidation?
Sometimes, yes. Depending on your company’s situation, there may be alternatives worth exploring before liquidation — including a payment arrangement with IRD, an informal creditor arrangement, or voluntary administration. These are not always appropriate, but they are worth understanding.
Fixity takes an honest approach: we will tell you if liquidation is the right option, and we will tell you if it is not. Our goal is the best outcome for you and your creditors — not the outcome that generates the most work for us.
Frequently Asked Questions
Do I have to pay the liquidator upfront?
Not necessarily. In most cases, the liquidator’s fees are funded from company assets as they are realised. Where a contribution from directors is required, this is discussed openly before appointment. We will never surprise you with unexpected costs.
What if the company owes more than it has? Will creditors chase me for the shortfall?
In a standard liquidation, creditors recover what the company’s assets allow and write off the rest. They cannot pursue directors personally for any shortfall — unless there is a basis for personal liability such as personal guarantees, reckless trading, or breach of director duties. This is why getting advice about your personal position is an important part of the process.
How long does a liquidation take?
A simple voluntary liquidation of a small company can be completed in a matter of months. More complex liquidations — involving asset realisations, investigations, or litigation — can take one to three years or longer. We will give you a realistic timeline based on your company’s specific circumstances.
What happens to my company’s name and number after liquidation?
Once the liquidation is complete, the company is removed from the Companies Register. The company name becomes available for re-registration (subject to certain restrictions), though the company itself ceases to exist.
Talk to Fixity About Your Options
If you are considering liquidation — or want to understand whether it is the right option for your company — Fixity can help. We provide clear, transparent advice with no surprises on fees.
Fixity offers a free, confidential initial consultation. We will listen, assess your situation, and give you a straight answer about where you stand and what your options are.
Call 0800 FIXITY (0800 349 489) or email info@fixity.co.nz
We work with businesses across New Zealand, including Auckland, Wellington, Christchurch and nationwide.
Larissa Logan | Director, Fixity | Licensed Insolvency Practitioner | FCA
