Liquidator
A liquidator is the person or people appointed to conduct the liquidation of a company.
A provisional liquidator is appointed by a court pending the determination of an application for a winding-up order. This appointment is usually made as a matter of some urgency before the company assets are dissipated. The official liquidator may not be appointed until sometime later. The extent of the provisional liquidator’s powers are determined by the court.
The official liquidator may be proposed to the Court by whoever put the company into liquidation (i.e. members, directors, creditors, or the court).
The responsibilities of a liquidator during an insolvent liquidation include:
- Providing reports to creditors
- Establishing the company’s financial position
- Selling its assets
- Investigating why the company failed
- Investigating if any offences were committed by directors or staff
- Making payments to creditors
Liquidators can be replaced. Creditors can vote out the incumbent at a creditors meeting. However, they need to have a replacement lined up, ready with written consent and sufficient votes in hand.
Courts can also order that a liquidator be replaced. This would happen only if a creditor or someone else with a financial interest in the liquidation had filed an application with the court.
Directors can’t order the replacement of a liquidator, even if they chose the liquidator through a creditors voluntary liquidation process.
Recommended reading:
Read the article: What business assets are lost in an insolvent liquidation?
