The liquidator is another term to describe the insolvency practitioner appointed to conduct the liquidation process.
In this article we’ll explore the role they play in closing down insolvent limited companies with debts, as well as their duties and responsibilities.
How is a Liquidator Appointed?
When a company chooses voluntary liquidation prior to being forced into a compulsory liquidation by creditors, they may choose their own liquidator.
When a company is placed into compulsory liquidation by the court, the Official Receiver (an officer of the Insolvency Service formally attached to a particular court) becomes the provisional liquidator.
In some situations, the Official Receiver will then make a recommendation for the appointment of an Insolvency Practitioner who would then take over part his role. This situation commonly arise when speed is of the essence: for example if some of the company’s assets were perishable goods, or when the case is complex.
Even when the OR does recommend the appointment of another IP, he/she will still conduct the directorial investigation, which is a standard part of the liquidation process.
Appointing an Insolvency Practitioner to Act as Company Liquidator
If your company is choosing voluntary liquidation, then you will need to make contact with an insolvency practitioner to act as liquidator.
These must hold a licence from one of the official regulatory bodies, of which there are 9 in the UK.
It’s important to appoint someone whom you feel undertands your situation well and who will do everything they can to support you through it.
Despite this, all insolvency practitioners have a statutory responsibility to investigate the actions of company directors in the period running up the the insolvency. This is to check for possible directorial conduct as wrongful or fradulent trading.
What are the Duties and Powers of Liquidator of Company?
Once appointed, the directors powers cease and the liquidator takes over. Liquidators are empowered to sell company assets, and pay creditors with the proceeds.
Their essential powers include:
- Verifying any claims from creditors
- The power to summon meetings
- Preparing a Statement of Affairs to summarise the financial situation of the debtors company
- to preserve and protect all of the debtors assets prior to selling them in order to repay creditors
- The power to employ a solicitor to assist him if necessary
How is the Liquidator Paid?
Liquidators are paid from the realisation of company assets. In fact their fee is the first to be repaid from the liquidation sale. In cases where the company has no assets to sell, it may be possible to use director’s redundancy payments to fund the liquidation.
If this isn’t possible either, the directors themselves may need to pay for the insolvency practtioner from personal funds.