Liquidation through a creditor lens

Last month, Marie Lee, executive director, restructuring and recovery, at Baker Tilly in Singapore, challenged three common liquidation myths. 

Too often, creditors and stakeholders react based on outdated assumptions rather than reality. 

In this next insight, Marie explains why informed creditors have more influence than they may think. 

Myth 1: Liquidation = total loss 

Reality: Recovery is possible. 

Liquidation does not automatically mean creditors will recover nothing.  

While outcomes depend on the value and liquidity of a company’s assets, experienced liquidators can strategically identify, realise and recover value.  

With professional oversight, liquidation can be a structured process aimed at maximising returns, not writing them off. 

Myth 2: All claims are treated equally 

Reality: Claims are ranked by law. 

Creditor claims are governed by a clear legal hierarchy.  

Secured creditors are prioritised only in relation to assets they hold security over, not the entire estate. In certain cases, recovery actions funded by creditors may even be prioritised, subject to court approval.  

Understanding priority can significantly change expectations around recovery. 

Myth 3: Creditors have no say 

Reality: Creditors can play an active role. 

Creditors are not passive observers. They have the right to raise concerns, vote on key decisions proposed by the liquidator and participate in creditor committees overseeing insolvent liquidations.  

Active engagement can influence outcomes and strengthen transparency throughout the process. 

The bottom line 

With the right professional guidance, liquidation can be transparent, strategic and driven by informed decision-making.  

For creditors who understand the process, it doesn’t have to be the end of the road, but rather a structured path forward.