ABSTRACT
When a company becomes insolvent, it should go into external administration. In PNG, there are two main types of external administration: receivership and liquidation (also known as winding up).1 We will deal with receivership in this chapter and liquidation in the next. Although insolvency is the main reason why companies go into receivership or liquidation, it is possible for these to happen even where a company is solvent. Receivership and liquidation serve two different purposes. Receivership is a way for a secured creditor to try to recover its loan by appointing a person to act on its behalf. Liquidation, on the other hand, involves an independent professional liquidator whose duty it is to sell the company’s assets and distribute the proceeds among the company’s creditors; the end result is usually the dissolution of the company.
