Question

(a) What are the qualifications and functions of the liquidator under the Companies Act of 2017?

Answer 1

Liquidator Meaning

A liquidator is a person or entity that liquidates something—generally assets. When assets are liquidated, they are sold on the open market for cash or other equivalents. The liquidator is legally empowered to act on behalf of the company in various capacities.

A liquidator refers to an officer who is specially appointed to wind up the affairs of a company when the company is closing—typically when the company is going bankrupt. Assets of a company are sold by the liquidator and the resulting funds are used to pay off the company's debts.

In some jurisdictions, a liquidator may also be referred to as a trustee, such as a bankruptcy trustee.

Qualification of a Liquidator

The Qualification of a Liquidator are given below:

1 - Member of a prescribed accountancy body

The person is a member of a prescribed accountancy body, being a person who –

• holds a current practising certificate issued by that body; and
• is not prohibited by virtue of rules of that body or a direction, ruling or decision of that body, or any disciplinary or professional practice committee of it, from acting as a liquidator.

2 - Practising solicitor

The person is a solicitor, being a solicitor who –

• holds a current practising certificate issued by the Law Society of Ireland under the Solicitors Acts 1954 to 2002; and
• is not prohibited by virtue of regulations made by the Law Society of Ireland, or a decision or order made

3 - Member of other professional body recognised by IAASA

The person is a member of such professional body as the IAASA may from time to time recognise for the purposes of this section, being a person who –

• is authorised for the time being by that professional body to pursue the particular activities that that body aims to promote or foster or as respects the pursuit of which by its members that body
• has been established to represent ; and
• is not prohibited by virtue of rules of that body or a direction, ruling or decision of that body, or any disciplinary or professional practice committee of it, from acting as a liquidator.

4 - Person qualified under the laws of other EEA State

The person is entitled under the laws of an EEA state, (other than Ireland), to act as a liquidator in insolvency proceedings and the qualifications held by, or the circumstances otherwise relating to the person, that entitle him or her so to act are ones that by virtue of any Community act, entitle him or her to act as a liquidator in the State.

5 - Persons with practical experience of windings up and knowledge of relevant law

The person -

• having made application in that behalf to the IAASA in the prescribed form within 30 months after the commencement of this section; and
• paid the prescribed fee and stands authorised for the time being by the Supervisory Authority to be so appointed, such authorisation having been granted on the grounds that each of the following is satisfied:

(i) the person has, prior to the commencement of this section, obtained adequate relevant experience of the winding up of companies and knowledge of the law applicable thereto by virtue of the person’s either -

1. having been–

(a) employed in relevant work by a person who at the relevant time fell (or, if this section had been in operation at that time, who would have fallen) within categories 1, 2 or 3; or

(b) engaged on his or her own account in relevant work; or

2. having practised in an EEA State (not being the State) as a liquidator;

(ii) the person is, in the opinion of IAASA, after consultation with the ODCE, a fit and proper person to act as a liquidator; and

(iii) the person does not fall within categories 1, 2, 3 or 4.

Fuctions of a Liquidator

  Fuctions of a Liquidator are given below:

(a) to verify claims of all the creditors;

(b) to take into his custody or control all the assets, property, effects and actionable claims of the corporate debtor;

(c) to evaluate the assets and property of the corporate debtor in the manner as may be specified by the Board and prepare a report;

(d) to take such measures to protect and preserve the assets and properties of the corporate debtor as he considers necessary;

(e) to carry on the business of the corporate debtor for its beneficial liquidation as he considers necessary;

(f) subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels in such manner as may be specified;

Provided that the liquidator shall not sell the immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant.

(g) to draw, accept, make and endorse any negotiable instruments including bill of exchange, hundi or promissory note in the name and on behalf of the corporate debtor, with the same effect with respect to the liability as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business;

(h) to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself;

(i) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligations and responsibilities;

(j) to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code;

(k) to institute or defend any suit, prosecution or other legal proceedings, civil or criminal, in the name of on behalf of the corporate debtor;

(l) to investigate the financial affairs of the corporate debtor to determine undervalued or preferential transactions;

(m) to take all such actions, steps, or to sign, execute and verify any paper, deed, receipt document, application, petition, affidavit, bond or instrument and for such purpose to use the common seal, if any, as may be necessary for liquidation, distribution of assets and in discharge of his duties and obligations and functions as liquidator;

(n) to apply to the Adjudicating Authority for such orders or directions as may be necessary for the liquidation of the corporate debtor and to report the progress of the liquidation process in a manner as may be specified by the Board; and

(o) to perform such other functions as may be specified by the Board.