Liquidator

What it means

The liquidator is the person who acts for a company once it has entered liquidation. The powers of the statutory body pass to them to the extent of acts aimed at winding the company up.

The general meeting appoints them and the appointment is entered in the commercial register; if the company appoints nobody, the court does. Entry into liquidation is conditional on a statutory advance being lodged in notarial custody.

A liquidator should not be confused with a bankruptcy trustee. The liquidator acts for the company and answers to its shareholders, while a trustee manages the assets under court supervision and in the interest of creditors. When a liquidation turns into bankruptcy, control over the assets passes to the trustee and the liquidator’s role narrows sharply.

How it works in practice

The liquidator publishes the notice of entry into liquidation in the Commercial Bulletin and invites creditors to lodge their claims. They draw up an inventory of assets and liabilities, realise the assets, end contracts and employment, and settle tax, VAT and levies.

At the end they prepare the accounts, a final report and a proposal for distributing the liquidation surplus, then apply for the strike-off. The advance held in notarial custody is released only once the liquidation is genuinely finished.

The liquidator is usually not an accountant, and we continue to keep the books during the liquidation. We prepare the financial statements, returns for shortened periods and the groundwork for the inventory of assets, while the liquidator decides and signs. The liquidator’s fee is agreed in advance and is an expense of the company that feeds directly into the balance left for shareholders.

What to watch out for

The role is often taken on by the director as a formality and the work postponed. Yet a liquidator carries the same liability for damage as a director: if the company turns out to be over-indebted they must file for bankruptcy, and filing late means paying creditors out of their own pocket.

Registrations are easy to forget during a liquidation. If the liquidator does not apply for VAT deregistration in time, the company must keep filing returns and control statements even though it no longer trades, and every missed filing risks a fine. Registrations are therefore cancelled in an order that still allows the final filings to be completed.