Liquidations (Voluntary, Court Appointed or interim)
In a liquidation, the powers of the directors to control the company are passed to a liquidator.
The liquidator has a statutory obligation under the Companies Act to release the assets for best possible value and to make distribution to company creditors in accordance with the priorities laid down in the Companies Act and the Personal Property Securities Act.
Liquidation is final. At the end of the process, the company is removed from the register of companies.
Although the liquidator may decide to trade on for a short term to achieve a sale of part or all of the business, unless all creditors are repaid in full and an appropriate application is made to the High Court, the liquidation of a company cannot be reversed.
Liquidators can be appointed voluntarily by the directors (but only if the constitution allows it) or, more commonly, by the shareholders by way of a special resolution.
The High Court can also appoint liquidators on the petition of a creditor, shareholder, director or administrator. The costs associated with taking that action are preferential in the liquidation.
Lastly, an interim liquidation is a little different.
The appointment is made by the High Court but the powers of the liquidator are usually restricted by court order to protect the assets rather than dispose of them. The liquidator must report to the High Court, rather than the creditors of the company, with their recommendations. These appointments usually occur when there is a dispute between shareholders, and one party believes the assets are at risk.
In all circumstances, the liquidator has a statutory obligation to review the affairs of the business and events leading up to their appointment.
For advice about your particular circumstance, book a free consultation with us by calling 0800 343 343.