Powers of the Liquidator

The liquidator is a trained accountant specialising in the liquidation of insolvent companies. With this appointment come certain powers that enable the liquidator to carry out his duties, meet the needs of the secured creditors and oversee the termination of the struggling company. These powers are quite frightening if you are a company facing liquidation, but remember the liquidator is trying to find an acceptable outcome for everybody. You need only worry if you have committed fraud, illegal trading, or taken part in activities that have led to the demise of your company.

Powers

There are certain powers that you would expect the liquidator to have, such as taking over the director’s role with all the responsibility that it carries with it and the power to carry out the requests of the courts and the creditors. Apart from that there are other far reaching powers that they have and can use if necessary.

A liquidator can:

• Apply to the courts for an order allowing them to examine under oath people involved with the company.
• Apply to the courts to be advised over ho best to proceed with the winding-up of the company.
• End any leases that are costing the company money and to ascertain which are saleable assets.
• Apply to the court to put in charge a manager who specialises in the area that the company trades in, such as an oyster farm, and which falls outside the knowledge of the liquidator.
• To sell the assets and the business to pay off the debts.
• Pay dividends to the creditors, employees and shareholders of the ailing company.
• Undo any dealings or trading that is deemed void by the liquidator.
• To wind-up and de-register the company.

The liquidator can force directors to comply with their requests for documentation and information under the law. Any director who fails to comply an face criminal charges. Apart from this the liquidator can also seize any information or books that they deem necessary and can force entry into any property that thy feel directors may have hidden assets in. They can also detain anyone who they feel has information regarding the insolvency of the company and if they find any illegal or suspicious circumstances they are required to report them to the ASIC who will then in turn prosecute any wrong doer.

In the Past?

If in the past few years any of the directors have sold, transferred or sold assets with the sold purpose of hiding them from creditors the liquidator has the power to overturn the sales and recover the property or goods. In the case of loans made to the directors the liquidator can also order that the money is paid back in full to be distributed to the waiting creditors. As discussed previously, if the directors are found guilty of any wrong doing, illegal trading or hiding of assets the liquidator will go after the personally for the debts of the company, even to the point of personal bankruptcy orders being made against them. There are also orders put in place that prevent the directors from starting, owning or serving on any existing or new company for a set period of up to fifteen years.