What is an interim liquidation?

An interim liquidation differs somewhat to liquidation. The appointment is made by the High Court but the powers of the liquidator are usually concerned with protecting the assets rather than disposing of them.

The liquidator must report to the High Court with their recommendations, rather than to the creditors of your company. Interim liquidations usually occur when there is a dispute between shareholders and the company assets could be placed at risk by either Director/shareholder.

I’ve received a Statutory Demand – what do I do?

When a statutory demand is served on your company, you have 10 working days to dispute the debt by filing an application to set aside the demand, or, 15 working days to pay the debt in full.

If the debt is neither disputed, nor paid after 15 working days, the company is deemed to be insolvent and the creditor can apply to the Court to place the company into liquidation. The burden of responsibility is then on the debtor to convince the Court that it is solvent. This will involve Court representation and legal fees.

I’ve received a Petition to Liquidate – what do I do?

This is the second step toward liquidation. Where a statutory demand by a creditor (including Inland Revenue) is neither disputed nor paid by the debtor within the requisite period of 15 working days, the creditor may petition to Court to place the debtor company into liquidation.

The petitioning creditor must however first serve at the registered office of the debtor company, a notice of its petition to the Court to liquidate the company, called a “Notice of Proceedings”.

This is a crucial point for your company. Unless within 10 working days of service of the notice of intent to petition, the shareholders of the company appoint a liquidator, no liquidator can be validly appointed until the Court hears the petitioning creditors request to appoint its chosen liquidator.

Can anyone be appointed liquidator of a company?

Although there are no strict requirements listed to become a liquidator, there are a number of prohibitions from accepting appointment.

Prohibited persons include:

• Anyone who has, in the two preceding years, served as shareholders, directors, auditors or receivers of the company or a related compan
• Anyone who has had a continuing business relationship with the compan
• The majority shareholder, directors or secured creditors are also prohibited from acting, unless the directors resolve prior to their appointment that the company will be able to pay its debts

How long does the process of liquidation take?

There is no fixed rule on the length of time it takes. Depending on the size of your business, the extent of the issues, and the process that needs to be undertaken, it could be completed within 6 months, but in many instances it may take longer, often 1 to 2 years.

Who covers the cost of the liquidators and how do they get paid?

The cost of the liquidation is covered from the sale proceeds of the company assets.

As a Director am I directly liable for any costs of liquidation?

No. However if you have signed an indemnity for part of the liquidators fees, you will be liable to the indemnity amount

As a creditor am I allowed to go on site and pick up any of my work tools, property or assets that have not been fully paid for?

No