What are the duties of liquidator?

Last Update: April 20, 2022

This is a question our experts keep getting from time to time. Now, we have got the complete detailed explanation and answer for everyone, who is interested!

Asked by: Mrs. Makenzie Casper
Score: 4.9/5 (20 votes)

The role of the liquidator is to take control of the business, sell the company's assets and distribute the proceeds to its creditors. The official receiver will frequently pass the liquidation process to an insolvency practitioner (IP).

What is the duty of a liquidator?

A liquidator is a person with the legal authority to act on behalf of a company to sell the company's assets before the company closes in order to generate cash for a variety of reasons including debt repayment. Liquidators are generally assigned by the court, by unsecured creditors, or by the company's shareholders.

What are the powers and duties of a liquidator?

Powers and Duties of Liquidators
  • to verify claims of all the creditors and consolidate them;
  • to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor;
  • to evaluate the assets and property of the corporate debtor in the manner and prepare a report;

Who appoints a liquidator?

The Official Liquidators are officers appointed by the Central Government under Section 448 of the Companies Act, 1956 and are attached to various High Courts.

Who can act as liquidator?

3. Eligibility for appointment as liquidator. (1) An insolvency professional shall be eligible to be appointed as a liquidator if he, and every partner or director of the insolvency professional entity of which he is a partner or director, is independent of the corporate debtor.

LIQUIDATOR- POWERS & DUTIES

35 related questions found

Is a liquidator an officer of the court?

In the guide to compulsory liquidation, it is stated that: "The liquidator is an officer of the court (Re Oasis Merchandising Ltd [1998] Ch 170). As such, he has a duty to act fairly and impartially (Condon, ex parte James [1874-80] All ER Rep 388)".

What does it mean to liquidate your assets?

To liquidate assets means to convert non-liquid assets into liquid assets by selling them on the open market. An individual or company can voluntarily liquidate an asset, or can be forced to liquidate assets through the bankruptcy process.

What is the opposite of liquidation?

Antonyms & Near Antonyms for liquidation. enactment, legislation.

What is liquidation of a business?

When a company goes into liquidation its assets are sold to repay creditors and the business closes down. The company name remains live on Companies House but its status switches to 'Liquidation'. ... Insolvent liquidation occurs when a company cannot carry on for financial reasons.

Can you sue a liquidator?

Leave to sue a court-appointed liquidator

Leave is required to sue a Court appointed liquidator. The courts have been reluctant to set down a hard and fast rule as to when leave will be granted.

What are the types of liquidation?

Types of Asset Liquidation
  • Complete liquidation. Complete liquidation is the process by which a business sells off all its net assets and ceases operation. ...
  • Partial liquidation. ...
  • Voluntary liquidation. ...
  • Creditor induced liquidation. ...
  • Government induced liquidation.

Why would a liquidator be removed by court order?

A liquidator may be removed from office by an order of the court. The court may dismiss the application if it thinks that no sufficient cause is shown but it cannot do so unless the applicant has had an opportunity to attend a hearing.

Can a liquidator be removed?

Other than where a liquidator has adopted the simplified liquidation process, creditors may remove and replace the liquidator at any time by resolution of creditors passed at a creditors' meeting for which at least five business days' notice is given.

Can creditors sue directors for breach of duty?

It is possible for a company to bring a claim against a director for negligence, misfeasance, breach of statutory duty or breach of fiduciary duty under the common law. The Act provides a mechanism for these types of claims to be brought by creditors, contributories, the official receiver or the liquidator [note 1].

How do I change my liquidator?

Under the Companies Act, 2013, the Company Liquidator can be removed if he/she resigns from the position. To resign the Company Liquidator can summon up a meeting and submit his/her resignation in the meeting. The Tribunal can transfer the assigned work of the earlier Liquidator to another Company liquidator.

Is liquidation good or bad?

Here are some more benefits to liquidation: You'll eliminate the chance of breaching your directors duties which is strictly against the law. You'll avoid the risk of your company trading while insolvent - that is not being able to pay their debts as they fall due.

What are the three types of liquidation?

There are three different types of Liquidation.
  • A Creditors' Voluntary Liquidation ("CVL") A Creditors' Voluntary Liquidation ("CVL") is an insolvent Liquidation, meaning a company is unable to pay its debts i.e. is considered insolvent.
  • A Members' Voluntary Liquidation ("MVL") ...
  • Compulsory Liquidation.

What are the two kinds of liquidation?

Company Liquidation of an insolvent company has two types Creditors Voluntary Liquidation and Compulsory Liquidation.

Who gets paid first in liquidation?

In liquidation, creditors are paid according to the rank of their claims. In descending order of priority these are: holders of fixed charges and creditors with proprietary interest in assets (first) expenses of the insolvent estate (second)

Is a liquidator personally liable?

A liquidator has only limited powers to enter into contracts on behalf of a company, and generally has no personal liability under such contacts.

How long does liquidation process take?

It involves handing your company over to a registered liquidator who sells you assets, pays your creditors, and dissolves the business. The liquidation process typically takes around twelve weeks for simple companies, or up to 18 months for more complex ones.

What are the consequences of liquidation?

The quick answer

The effects of liquidation on a business means that it will stop trading and the powers of the director's will cease. The directors are replaced by a Liquidator whose job it is to realise the assets of the business for the benefit of all the creditors. All of the employees are automatically dismissed.

What is the process of company liquidation?

Liquidation is a process of bringing the finance and economics of a business to an end. This event generally comes when a company has been insolvent and is unable to pay its obligations, so it distributes the property within its claimants. ... Liquidation is a process of terminating the affairs of a company, business, etc.

How much tax do I pay if I liquidate my company?

Having your limited company liquidated by a licenced insolvency practitioner means your reserves can be distributed as capital, meaning they are subject to capital gains tax (CGT) at either 18% or 28%. But one of the major benefits of using an MVL is that it utilises Entrepreneurs' Relief.