Status as on- 19/01/2022
Introduction
The winding up of a corporation is the process by which all of the company’s assets and property are allocated to creditors according to the outstanding debt, and if any excess money exists, it is distributed among members, shareholders, owners, and others according to their rights. The board of directors must select an administrative person known as a liquidator to oversee these activities. The company’s name was struck off the register of companies after all of these procedures.
Meaning of Liquidation and Liquidator
Liquidation is the process of ending a company’s financial and economic operations. When a company becomes insolvent and is unable to pay its debts, it distributes its assets among its claims. The general partners are the ones who are being liquidated.
A liquidator is a person who is usually appointed by the court, unsecured creditors, or the company’s shareholders. He is the person in charge of asset liquidation (in most cases). When a Company is insolvent and bankrupt, the liquidator is usually appointed. Following his appointment, he assumes control of the organization’s assets, properties, and people.
He has the legal authority to act on behalf of the corporation in various capacities. The liquidator can sell the company’s assets on the open cash market or any other items of similar worth in order to liquidate the company.
Duties of Liquidator
The scope of the liquidator’s work is given under Section 35 of the Insolvency and Bankruptcy Code, 2016. It has been explained below:
- The liquidator has to verify all the claims of the creditors.
- He has to take control and custody of all the assets, effects, and actionable claims of debtors, property, etc.
- To enumerate the property and assets of the corporate debtors in the way prescribed by the Board and has to prepare a report on it.
- To protect the property and assets of the corporate debtors when he considers it necessary.
- Continuing and carrying on the business of corporate liquidators for the beneficial liquidation if he considers it necessary.
- To inquire about the financial affairs of the corporate debtors to compose unnoticed and preferential transactions.
- Applying the adjudicating authority for orders and directions that may be necessary for the liquidation of the corporate debtors and reporting the progress in the manner prescribed by the Board.
- Performing any other functions that are specified by the Board.
Conclusion-
The Company Liquidator is empowered to carry out all of the powers and responsibilities outlined in the Companies Act of 2013. The Liquidator is responsible to the Company’s creditors and stockholders. The Liquidator has a fiduciary responsibility with the Company and its creditors. The major goal of choosing a Liquidator is to resurrect a failing firm and operate professionally.
Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinion before relying upon the article. For more information, please contact us at rera@centrik.in
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