A Liquidator is an official who is required to get in and realise the assets of a company so that cash payments can be distributed to creditors or shareholders. The role of Liquidator is that of an orderly winding up of a company so it may be permitted to be closed down.
Liquidators take over running a company from the former Officers whose conduct they may have cause to decipher. This may be required as a matter of law in the case of an insolvent Liquidation or when shareholders have concerns about conduct issues that may have caused the Liquidation to arise.
A Liquidator supersedes the Directors. He or she must be impartial because their role is designed to handle the company’s money on behalf of the shareholders and or the creditors.
Turning The Assets Into Cash
A Liquidator is an official who will often be a jack of all trades. Whilst some Liquidators will be specialists in certain industries, many will have been Liquidators of many different types of businesses. Their job is one that involves dealing with any contested rights to the company’s assets and the instruction of specialist agents who can maximise value for creditors or shareholders from the company’s property.
Investigation Of The Officers
In the case of an insolvent company when creditors have suffered losses, an important function of the Liquidator is to review the officers’ conduct and the reporting of any misconduct to the relevant authorities.
In the United Kingdom (“UK”) for example only, company officers are referred to as the directors. A Liquidator of an insolvent company in the UK has a duty to report on the conduct of the directors to the Insolvency Service. If their conduct is deemed to be unfit then a Director can potentially face company director disqualification proceedings which could mean they are unable to run a company for a number of years.
Reporting To Creditors and Shareholders
A Liquidator must report on their administration of the Liquidation to creditors and shareholders, providing useful information about the assets they have turned into cash and how it has been spent to recover further monies.
Any money to be distributed to the shareholders and or the creditors will be paid by the Liquidator but only after the costs and expenses of Liquidation have been settled. As a result, such parties will want to know what they are likely to receive from the Liquidation and if they are unlikely to receive anything, the reasons for that position.
Closure Of The Corporate Body
A company that goes into Liquidation does not just need a Liquidator to distribute the assets. In order to close a company down a whole range of matters may need to be addressed such as:
- Obtaining agreement from the tax authorities all relevant returns have been filed.
- If the company is registered with regulators liaising with them to comply with any relevant laws.
- Assembling the company’s records which might be relevant if any prosecuting authorities wishes to investigate matters.
- Closing down any websites that refer to the company so that members of the public are not left with the impression that the company is still trading.
- Adjudicating the claims of creditors.
- Dealing with and settling any disputes that the company might be a party at the point of Liquidation.
- Bringing any legal proceedings that might be necessary to recover further funds to improve the company’s asset position.
Whilst a Liquidator will not trade, he or she has considerable administrative responsibilities that can take time so that a company can be fully liquidated and then dissolved.
