What Is A Liquidator?
A liquidator is an expert accountant or office receiver who administers the complete liquidation procedure while adhering to industry standards. A liquidator is a person who liquidates something, usually the assets. He or she is hired especially when a company gets bankrupt and needs to take care of the financial aspects.
When liquidated assets are sold for cash or other equivalents on the open market. The Liquidator has the legal authority to act on the company’s behalf in various roles.
The function of a liquidator is to wind up a company and deliver a return to creditors using the company’s assets, as well as, in rare cases, a return to shareholders.
Role Of Liquidators
A liquidator’s job is to look at the insolvent company’s financial management. The Liquidator will secure and collect all of the company’s assets, pay creditors, and undertake any necessary investigations into the company’s financial management.
The liquidator is responsible for thorough research of the company’s records and books. Also, they need to determine from the record what causes the insolvency of the company. Their main motto is to shut down everything in a proper manner.
A liquidator must be able to:
- Examine a company’s financial situation.
- Be impartial.
- Be skillful while doing the job.
- They should avoid putting themselves in a situation where their interests might collide with their professional obligations.
Duties Of The Liquidators:
A liquidator performs many duties. Here are the duties:
The first responsibility of a liquidator is to provide notification of his appointment. In this section, the Liquidator must notify the Assessing Officer of his appointment, who is entitled to assess the company’s income within thirty days.
Investigate a company’s operations since its inception.
The Liquidator may receive all required information regarding the company’s financial management and affairs that he reasonably requires while winding up.
Determine the asset of the company and recover it
Recovery of the company’s assets is the company’s responsibility. His powers are intended to ensure that this responsibility is carried out effectively.
Form winding-up committee and make reports
It is the Liquidator’s responsibility to apply to the tribunal to form a winding-up committee.
Tips for Choosing the Liquidators:
It is not easy to choose a liquidator. However, it’s important to note that once the Liquidator is appointed, they have practically unlimited power over the process. Therefore, be careful while choosing.
Follow these tips:
Cost – Know the typical cost of a liquidation throughout the market – if it sounds too good to be true, it probably is!
Service – Check to see what is included in the price and what level of service you can expect.
Over-Friendly Liquidators – Friendly liquidators who deflect your questions are more likely to keep you in the dark throughout the process – find a pragmatic IP that is willing to go through everything before you sign.
What Does a Liquidator Get Paid for?
Liquidators charge a price for their services, which varies according to the company’s size, the complexity of the case, and the amount of time it takes to complete the task.
According to the law, liquidators’ fees and expenditures must always be paid first. After that, payments are distributed to senior secured creditors, unsecured and subordinated creditors, preferred shareholders, and common shareholders.
A liquidator is a company’s agent who is responsible for acting appropriately. Hiring a liquidator aims to wind up a failing or bankrupt company; thus, he should operate professionally. However, he must avoid the kind of complacency that may have contributed to the business’s collapse in the first place.