A liquidator takes control of a company and sells all of the assets to pay back the creditors. The directors give up control of the company to the liquidator.
Their Official Role
A liquidator is a Licensed Insolvency Practitioner acting as an Officer of the Court. They have the power to get in and realise assets, dismiss staff and deal with the creditors. They will also close down any offices or business premises.
The overall objective of a liquidator is to make sure all business assets are sold at a fair value and that the creditors are all treated in accordance with their legal rights. Some creditors have different rights to others. As an example, employee’s claims can be preferential – so paid first before other creditors up to a maximum of £800 each, with the balance ranking with other creditors. Another example is a bank may have a first claim if they have a debenture.
A liquidator will report to creditors before they are appointed setting out a financial snapshot of the company and will also send creditors annual reports explaining the progress of the liquidation.
Do You Need A Liquidator?
Any business which is looking to enter into a liquidation will need a licensed insolvency practitioner to act as the official liquidator, company directors are not able to liquidate the company themselves. Aside from this, it is also very beneficial to have a qualified professional with relevant experience on hand to guide you through what can often be a very complicated process.
How much does it cost to get a liquidator?
The costs of appointing a liquidator depending on the complexity of the business’ situation and the volume of assets held. If a company offers to liquidate your company for a cost which seems too good to be true, chances are it will be. The liquidator will have their own official costs in relation to the process and these must be covered as a minimum.
View our other liquidation articles for more information.