A liquidator here is a person or any entity or organization that has the authority to liquidate assets in the open market. The liquidator is not any person or authority who can act on his own wills. They are given the power to do so by a certain higher authority like directors of a company to pay their debts and close their business. He is generally an officer appointed to close up all the operations of a company and sell off its assets to repay the loans and debts of the company. The funds accumulated from the proceeds of the liquidation process are used to pay off the company debtors.
Understanding Liquidators In Depth
Liquidators are persons who are bestowed with powers to liquidate the property of a company when they are shutting down. The money that is accumulated from the proceeds is used to pay off the debtors of the company. Liquidators can be appointed by courts for the compulsory liquidation of a company or business. In this case, stakeholders and debtors can file a case against a business in court.
This happens generally when a company goes bankrupt. And when the company is liquidated, the entire power of the company goes into the hands of the liquidator. In fact, all control over assets is given into the hands of the designated liquidator. His primary function than to sell off all the assets and gather the total funds received from it into one account. He will then start paying off all debtors.
When Is A Liquidator Appointed?
A liquidator is appointed when the shareholders have reasons for dissatisfaction with the way the company functions or there are irregularities. If a company files for bankruptcy a liquidator is immediately appointed to look into the affairs of the company. He is appointed when a particular business house is struggling to remain afloat in the market.
The Liquidator’s Potentials
The law of the land binds the powers and potentials of the liquidator. He is the sole authority over the bankrupt company till all the assets have been sold off and the debtors have been paid off. In some cases, the liquidators are granted liberties while still being under the supervision of the court.
The liquidator is the custodian and has responsibilities toward all the parties that are involved with the company. When there are any decisions to be made for the company, the person to whom all concerned parties go to for all decisions regarding the company and its assets and finances. But the importance of the liquidator can be realized when all the assets of the company are under his control till all disputes are resolved.
He keeps all the money under his control to ensure smooth proceedings and that all debtors receive their dues. Finances are not the only aspect that he deals with. He also takes care of letters, correspondences, and emails and also holds meetings with creditors. He also issues directives and other important notices on behalf of the company’s directors.
The Payment Received By The Liquidator
A liquidator definitely does not work for free. He charges a certain amount of fees. The fees depend on the size of the business and the number of duties and responsibilities that he carries out. It also depends on how critical the case is and the amount of time that he is expected to give to the company.
Going by the law, it is the liquidator who receives his payment before any debtor. The liquidator may carry out many responsibilities, but he cannot involve in the operation of a company. It is decided by the shareholders or the directors of the company.
The liquidator’s role winds up with the closure of all the issues and problems of the company. When all the shareholders and debtors have received their money and all matters are resolved, a liquidator can close the business and remove the name of the business from the registry. He will give notice to all concerned with the company’s dealings before finally wrapping it up. If the concerned people ask for further explanations or have any doubts or questions in mind then he has to be there to resolve such issues.
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