The liquidator is also responsible for proper accounting. This includes an opening balance sheet from the date of the resolution of dissolution of the company, a final balance sheet at the end of the liquidation process and regular interim balance sheets for each financial year closed. In addition, he must prepare a winding-up report setting out the current financial situation of the enterprise and the progress of the liquidation. The liquidator has various powers to realize or sell the assets of the business and use the proceeds to settle debts. The insolvency practitioner takes control of the business, meets deadlines for paperwork, keeps authorities informed, settles all claims against the company, questions the directors and reports on the reasons for liquidation. He or she will also dissolve the company, in other words, remove the company from Companies House`s public register. When an insolvent company is put into liquidation, the main task of the liquidator is to realise the assets and property of the company and use the proceeds to repay the company`s debts and liabilities. However, one of the most important powers of the liquidator is the right to refuse „incriminating property“. Simply put, this means that any unprofitable contract or any business property that is unsaleable or produces liabilities can be rejected by the insolvency administrator. For example, a commercial lease is generally „onerous“ because there is an obligation to pay rent and other amounts to maintain the property. In contrast, a formal insolvency practitioner is usually appointed when a business is forced into liquidation by angry creditors and a liquidation order is made by the court. Its role in this situation is to investigate the reasons for the company`s bankruptcy and to deal with its assets and liabilities.

Section 275 of the Companies Act 20136 deals with the appointment of liquidators to administer the affairs of the company in liquidation or the administration of its affairs in connection with the hearing of the application for liquidation. This section incorporates the change in policy in amended sections 448 and 450 of the 1956 Act, which provide for the appointment of independent professionals as liquidators of the company. This follows the recommendations of the J J Irani Committee and the Erabi Committee for the formation of a body composed of professionals who could act as liquidators of the company in the liquidation. When a person is appointed liquidator of a company, he is expected to perform certain tasks specified in various legal provisions. The functions of a liquidator are as follows: 1[„(2) The provisional liquidator or liquidator of the company shall be appointed by the court from among the insolvency professionals registered under the Insolvency and Bankruptcy Code 2016;“] 6. „to prepare, in his official name, comfort letters addressed to a deceased person and to perform in his official name any other act necessary to obtain payment from a debtor of contribution or succession, which cannot be conveniently performed in the name of the company; in order to allow the liquidator of the company to issue the letters of recommendation or recover the money, the liquidator of the company is deemed to be entitled to the liquidator of the company himself“;12 Sellers can submit a liquidation order to Amazon and Amazon will then find a liquidation bidder or liquidator (liquidation buyer). The liquidation buyer pays a percentage of Amazon`s average selling price (ASP). After deducting the fees, Amazon assigns a net salvage value to the seller. Liquidation buyers can sell liquidated inventory through other online or offline channels.

Typically, clearance buyers are unable to return liquidated inventory at source. Since these products have already been filed and reviewed, many clearance buyers feel that it is easier to run a liquidation business than to sell their product and develop a brand image. Liquidators are also appointed in the event of voluntary liquidation of members (MVL). Here, the company is solvent and able to pay all its creditors in full. Directors often make the decision to go the MVL route for tax purposes or to restructure the business. In this scenario, the relevant resolutions must be passed at a general meeting in order to dissolve the company and appoint a liquidator. The court may dismiss a liquidator if his duty is contrary to his interests. In the event of a conflict of interest with creditors, it is up to creditors alone to decide what to do.25 – In the event of a breach of any of its obligations, a voluntary insolvency practitioner may be liable for the consequences of such a breach. Thus, if he acts in part or commits a misappropriation of funds or betrays the fiduciary relationship in which he finds himself with his company, he is responsible for the consequences of the unlawful acts, omissions or misappropriations. He must be honest and impartial and must never act in his own interest, otherwise he will be responsible‖ If he makes secret profits, he is obliged to repair from his company everything he has secretly received. If it is unfair to all creditors or contributors, an application for dismissal may be made to the court, and the court may dismiss it if it considers it appropriate.26 Once the affairs of the corporation have been fully settled, the liquidator notifies the directors, creditors and the court of the corporation.

At this stage, creditors have the right to request additional information from the insolvency practitioner, to challenge his fees and expenses, or even to oppose his removal. However, this must be done in writing up to eight weeks after termination by the liquidator. If, during the investigation of the company`s transactions, the liquidator reveals misconduct on the part of the company`s management, he may be entitled to take legal action for illicit trade or, in extreme cases, for fraudulent trade. A liquidator tasked with liquidating a failing business should act professionally and not show the kind of complacency that could have caused the business to disappear in the first place. In addition to taking control of the corporation, selling the company`s assets, and distributing the proceeds to creditors, the liquidator may also be responsible for keeping the private company`s books and records. After five years from the date of termination, the receiver may, under U.S. law, destroy some or all of the books and records in his possession. A liquidator in the general sense is a person who is appointed upon the dissolution of a corporation, either by force or voluntarily, in order to carry out the process of liquidation of the corporation. Before a company definitively ceases to exist, it is required to realize the assets of the company that must be offset against the creditors, bondholders and other liabilities of the company, and this is the duty of the liquidator.

A liquidator only comes into play when a company is dissolved. An official liquidator is appointed by the court at the time of compulsory liquidation, while a liquidator of the company is appointed by the members of the company at the time of voluntary liquidation. The main objective of this article is to understand the need for a liquidator.