You have probably heard about liquidation or a liquidator but are not sure what they do. This is a common thing as this word is thrown around a lot without much knowledge on it. Essentially what a liquidator does is sell (liquidate) assets of a person, party, or company on a legal behalf.
Liquidating assets can refer to, as mentioned, a lot of different groups of reasons. It might be a personal estate or a company that is going bankrupt. In this case, it is about the roles and duties of a company liquidator. So, what exactly does a company liquidator do? Well, take a look and find out.
Evaluating Asset Worth
Part of the company liquidator’s duties is to help determine the value or worth of all assets that are up for insolvency or liquidation. This process helps determine what losses the company can recoup through selling off assets, debts, or other financial burdens. Realizing this asset worth helps determine what the price would be for selling off these assets. Liquidation is often about how much a company can get during this process, and a company liquidator takes it upon themselves to find a fair and reasonable value on behalf of said company.
Act As a Legal Authority
Liquidators act as legal authority for these companies. Due to the nature of evaluating assets and selling off this property for cash or other debt repayment, among other functions, the liquidators act as a legal authority in court situations, with shareholders, and creditors. As discussed more in-depth on this page, the members’ voluntary liquidation process is the legal process to complete a company’s liquidation affairs. It represents a cost-efficient way to perform the liquidation functions for a company. The legal aspect of a company liquidator is important because they must balance the legal importance of handling insolvency and evaluating asset claims to come to a reasonable conclusion.
Conclude Outstanding Contracts and Disputes
Wrapping up all of the outstanding contracts, legal disputes, and claims in a timely fashion is of the utmost importance during this process for a company liquidator. These claims need to be settled before the final sale of assets, and the company is delisted from any register as a legally operating business. Wrapping up these contracts involves contacting anyone who is purchasing assets or involved in the company’s solvency process. This can be shareholders as well as partners.
Complete Necessary Paperwork For Deadlines
Continuing in this trend of deadlines is the completion of necessary paperwork. Understanding the importance of deadlines is key in a liquidation process because there is a fixed amount of time a company can file for bankruptcy or solvency, sell off their assets, and wrap up the entire act. Understanding the necessary paperwork is important for business as a whole, but in this case, it is essential due to the nature of it being so time-sensitive. Again, acting on behalf of the company as a legal authority, the company liquidator is responsible for making sure these documents are properly completed and distributed to the right parties to formally resolve the liquidation process.
Perform Duties in an Impartial and Professional Manner
There are the technical matters of company liquidation that the liquidator is responsible for, but they also must act in accordance with principle as well. Due to the fact that they are a legal authority, they must act impartially and professionally in this matter. What this means is that they are responsible for upholding the responsibility to shareholders and creditors, properly handling the asset evaluation, while also ensuring that they are not in a position where personal conflict of interest will be an issue.
This seems counterintuitive if they are working both for the company and those with outstanding issuance with said company, but they are meant to be a mediator for both sides in distributing what is fair for value’s sake.
Investigation Into Company Finances and Affairs
Lastly, there is the duty of investigation in the company finances, such as assets, allocation of funds, etc. as well as their affairs like operations and financial records. This is done to ensure that the process is not going to be interfered by improper action on behalf of the company. Ensuring the success of the liquidation can be influenced by the investigation results and must be done thoroughly by the company liquidator.
Liquidation seems like such a foreign term for many of us, mostly because we, and by virtue, our assets, are not solvent. When it comes to businesses or company’s, this process is much more common. It is important to know what a company liquidator does to understand the whole process, whether you want to brush up on your financial and business knowledge or if you are a company owner or stakeholder.