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What Does A Liquidator Do?

2nd September, 2022
Keith Steven

Written ByKeith Steven

Managing Director

07879 555349

Keith is the author of the content on this comprehensive rescue, turnaround and insolvency website. He is the managing director of KSA Group Ltd - a specialist firm of turnaround and licensed insolvency practitioners. Keith was nominated for Turnaround Practitioner of the Year 2014 at the National Insolvency and Rescue Awards in 2014.

Keith Steven
  • What is a liquidator?
  • What does a liquidator do?
  • How much does it cost to get a liquidator?
  • Do liquidators and directors work together?

Are you worried that your business is going insolvent? Are you considering liquidation?

You will need a liquidator appointed to take on the process of liquidating a company. So, understanding their role will help you understand the entire liquidation process and what it might mean for your business. It will help you prepare for the proceedings, avoid stress and get you ready for life post-liquidation.

Liquidation is a last resort for most businesses, as it results in company closure. Winding up a company and selling its assets through liquidation helps recover funds for its creditors and ends all legal proceedings concerning the company and its directors. These proceedings can be either compulsory or voluntary, but always result in the company closing and the directors seeing little return.

What is a liquidator?

A liquidator is a licensed insolvency practitioner who oversees the liquidation of a company. They are either appointed by the court during a compulsory liquidation hearing, or by the creditors in a Creditors’ Voluntary Liquidation (CVL).

A liquidator is either a licensed Insolvency Practitioner (IP) or an Official Receiver (OR). They act as an officer of the court, having power over the company, able to dismiss staff, deal with creditors, realise assets and close the company.


What does a liquidator do?

Once a liquidator is officially appointed, they are in charge of closing down the business and investigating the circumstances that led to the company’s insolvency.

Their main purpose is to convert any remaining assets into cash and pay as many creditors as possible with those funds, hoping to pay dividends too. However, some creditors may not see a return due to liabilities that outweigh the financial worth of the remaining assets. Liquidators ensure creditors are all treated in accordance with their legal rights.

A liquidators role involves a variety of administrative tasks: arranging meetings, completing paperwork and investigating the directors’ conduct. But in terms of specific duties, liquidators are likely to:

  • Sell all remaining company assets to maximise returns (with the asset value checked by independent valuation agents to ensure valuing at a fair price)
  • Arrange payments for creditors using capital from company assets
  • Wrap up any outstanding contracts or legal disputes, as well as the final VAT bill
  • Complete all relevant paperwork to deadline and report to authorities
  • Communicate with creditors, keeping them informed and involved in decisions as appropriate
  • Settle liquidation costs
  • Interview and report on the factors that caused the liquidation
  • Remove the company from the Companies Register

The role of a liquidator is multi-faceted, with their full range of responsibilities determined in part by the type of liquidation a company is entering.

How much does it cost to get a liquidator?

Hiring a liquidator has a cost basis dependent on the complexity of the business’ situation, the volume of assets held and how effectively the liquidator works.

Payment can be a fixed sum, hourly rate or as a percentage of the assets realised. Whatever the payment, it should be agreed at the creditors meeting.

A full estimate of the liquidators fees should be provided in advance of the work they do. A breakdown of the time spent on the case, where and how should be given, as set out in the Statement of Insolvency Practice (SIP) 9 principles. Evidence of any expenses should also be accounted for.

Do liquidators and directors work together?

Liquidators enable you to officially ‘close the book’ on your company and move on to new ventures. This signals the end of your company, but ultimately your skills and other elements of the business could be taken on to new, more successful projects.

Moving on to directors, they still have a role in the early stages of the liquidation process. For example, as a director, you must:

  • Send all company books and records to the liquidator
  • Complete a questionnaire regarding the company
  • Attend a meeting with the insolvency practitioner and the shareholders to approve the process of liquidation

Another role of the liquidator is to investigate the conduct of the director(s), looking for any evidence of wrongful or fraudulent trading. If they happen to find any evidence, consequences arise such as fines, director disqualification or even a prison sentence. However, if they find nothing, the liquidation process will wind up the company and the director(s) will be free to move on, find a new job or even start a new company.

For the latter, you’ll need a comprehensive understanding of the ‘Insolvency Act 1986’ to ensure you’re eligible to run a new company, and that the name you choose is not in breach of section 216 of the Insolvency Act – basically, you cannot use the same or similar company name to the liquidated one.

Talk to our insolvency experts who can provide you with specialist advice on the Insolvency Act and all liquidation-related processes. Using our years of experience working with HMRC, banks, creditors, suppliers, shareholders, lenders and more, we are here to help you take the right path through the liquidation process.

Worried Director What Will Happen To Me After Liquidation?

in Company Liquidation What is …?

"A man in the pub said I cannot be a director of any other company if I liquidate my company. Is this true?"Actually, this statement is entirely false! Misconceptions like this frequently arise from individuals with limited understanding of the subject matter. Such misinformation can cause undue anxiety for directors considering liquidation, fearing it might personally affect them. Guess what? Listening to bar room experts, inexperienced accountants, or no insolvency specialist lawyers can stop decisions being made, this failure to make a decision is really what could land you in trouble. So how will liquidation affect me and how long does it take? Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time. What is more, if as a director, you have been compliant and on the payroll for many years, you can actually claim redundancy from the government like any other employee. But, and it is a big but, if you fail to act in time, fail to act reasonably, fail to keep books and records, continue taking credit KNOWING that the company cannot possibly repay it, then you ARE at risk of personal financial loss or worse such as losing your house. So, act now and get help for your company and more importantly start reducing your own risks.Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future. As a director of an insolvent company, you are at risk if you do not act. This risk RISES the longer you don't act to put the company into liquidation.If you fail to act and the company is wound up by the creditors (compulsory liquidation) then the Official Receiver (OR) will be appointed to liquidate the business and he or she will investigate the activity of the directors and the business over the last 2-3 years. This is known as a conduct report on each director.  If the OR can prove there was wrongful trading where, for instance, you have taken credit from a supplier or took deposits from customers when you knew that it was highly unlikely that you could pay them back, then you could be made personally liable.This is known as the "lifting of the veil of incorporation" that protects directors under limited liability. If this happens then you could made liable for PAYE, VAT and creditors monies from the time that you should have known the company had no reasonable prospect of surviving the problems it faced.Additionally, the directors may face disqualification proceedings under the Company Directors Disqualification Act 1986 for up to 15 years, they can be fined and may face the loss of personal assets like your home, or even personal bankruptcy.Look, if you as directors have acted naively you may not know that you have broken these laws, but now you do know, it is vital to ensure that you protect yourself as a director by acting quickly to cease trading and put the company into voluntary liquidation; or consider a company voluntary arrangement if the company is VIABLE if the problems are solved. What is Creditors Voluntary Liquidation and what does it mean for me? In short, liquidation usually means, the company's trading stops and it's assets are turned into cash or "liquidated".All other possible liabilities, like employment liabilities, landlord's rent or payments to lease companies are stopped. It really is the end of the company, but the "business" may survive if a phoenix is organised. Liquidation is a powerful way to END creditor pressure and let you get on with your life. What if I have signed personal guarantees? If you have signed personal guarantees or indemnities to lenders, then the liquidation could lead to them being called in if the bank cannot get its money back from the company. There is little that can be done about that, but you should not delay decisions on liquidation to try and prevent a PG being called in: just think what ALL of the company's debts landing on your shoulders would do. Also it should be noted that HMRC now rank ahead of floating charge holders in any liquidation since December 2020.  Consequently, this may well mean that lenders that you have personally guaranteed will get less recovery hence exposing you more.All banks will agree a deal to repay the PG over time - provided you work with the bank to reduce their exposure.One great piece of FREE advice - always make sure that ALL tax returns, VAT returns and annual returns have been completed and sent in and that other "compliance" issues are dealt with wherever possible. These are important processes and will help protect you as individual directors. It shows that you have been acting properly.  I have heard about directors being able to claim redundancy in liquidation If you have been employed by the company and made payments via PAYE then you will be able to claim redundancy from the government and this is in fact a very simple process (20 minutes to fill out a form and we can help with that) so there is no need really to employ a third party to make a claim.  This process has been open to fraud so the HMRC are cracking down on operators that claim to be able to get money back when there is not enough "paperwork".  It isn't worth the risk.  If it sounds too good to be true then it probably is!You need to learn more about the options. This is clearly a general guide so, if you have any worries at all, please, just call us and we will talk you through the situation free and with expert guidance for your situation. Call one of our advisors or if you prefer, call our IPs (insolvency practitioners) now:Just one CALL will help relieve the stress and get you out of the mess.Why not call 08009700539 or 020 7887 2667 now?We could help you start the liquidation process today.(8.15am till 5.00pm; Out of hours call on 07833 240747, Wayne Harrison (IP)  or Eric Walls (IP) on 07787 278527)Finally, please remember this: NO BUSINESS is worth losing your health, relationships, marriages or your children over. Act properly, take advice, get the problem sorted and then get on with your life. In a little while the stress will go and you can focus on other things that are more important.Want more information on liquidation? Get our new free 2023 Experts Complete Guide to Creditors Voluntary Liquidation that covers Bounce Back LoansWe are experts in liquidation, voluntary liquidation, administration, pre-pack administration, business rescue, corporate rescue and company rescue, we can help solve your problems but only if you talk to us. Call 0800 9700539 for help.or email us your worries at 

Worried Director What Will Happen To Me After Liquidation?

Notice of Intention To Appoint Administrators

A notice of intention to appoint administrators is when the company files a document to the court to outline that it intends to go into administration if a solution cannot be found to its immediate financial problems. It can be used as part of the pre-pack administration process as well as used to restructure a failing business to avoid its liquidation.

Notice of Intention To Appoint Administrators
Man with umbrella

What Is A Winding Up Petition By HMRC or Other Creditor

A winding up petition is a legal notice put forward to the court by a creditor. The creditor petitions to the court if they are owed more than £750 and it has not been paid for more than 21 days. The application, in effect, asks the court to liquidate the company as they believe the company is insolvent.

What Is A Winding Up Petition By HMRC or Other Creditor

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