At Financial Discuss we’re often asked, what is the role of a liquidator?
Once the decision has been made to place a company into liquidation, an officer will be assigned to complete the process and tie up all the loose ends.
Essentially, the main responsibilities of this officer, known as the liquidator, is to dismantle the business and settle claims with creditors who are owed money.
Powers of the Liquidator
When a liquidator is appointed they are given equivalent powers as a director, along with some further privileges appointed by the state. During the process, they are permitted to review the entire accounting history of the company and analyse individual payment details.
They can also apply to the court to investigate individuals associated with the business. The main motive of this is to see if employees performed their duties in the best interest of the company, rather than themselves, up until the liquidation process began.
The role of a Liquidator
The liquidator, either employed independently or by the court, will be a fully trained accountant and experienced in undertaking such a process.
Fundamentally, their main responsibility is to strip a company down, value its assets and sell them off in order to satisfy creditors. The job isn’t always a pleasant one and some tough decisions need to be made throughout this difficult phase.
The liquidator must remain impartial at all times and comply with state law when winding up the company in question. They must act in the best interest of all sides, although their main responsibility must lie with the creditors who are owed money.
Additional aspects to the role of a liquidator include:
– Investigating why the company found itself in financial difficulties.
– Looking into the conduct of its managers and directors. Statements should be gathered under oath.
– Recover external assets or loans which the company may have taken. Debts owed to the company should also be recouped if possible.
– Value assets and sell them for a fair price.
– Pay money owed to creditors as well as shareholders if viable.
– Dismantle and deregister the company before placing it into dissolution. This is the final stage of liquidation.
How to choose a Liquidator
With such a delicate and difficult decision to wind down your company, choosing an experienced and efficient liquidator will make the process easier and help reduce losses. It is recommended you find an officer you can trust before coming to a final decision and work closely with them whilst the liquidation takes place.
If you’d like any further information about the role of a liquidator or any other liquidation services then please do get in touch.