Question

1. Describe three ways in which a liquidator might be appointed.

Answer 1

Ways to appoint a liquidator

Company liquidation is the process of closing the operations of a company by liquidating all its assets for the settlement of all its liabilities. There are mainly three types of liquidation there such as compulsory liquidation by the court, voluntary liquidation by creditors, and voluntary liquidation by the shareholders. The officer who is appointed for this purpose shall be called as liquidator. The following are the three ways in which a liquidator be appointed.

By shareholders

Under this, the shareholders of a company are taking initiative in liquidating a company. Here the shareholders are choosing the liquidator also. It takes place when a majority of shareholders of a company wish to liquidate a company.

By creditors

Under this, the creditors of a company are taking initiative in liquidating a company. Here the creditors are choosing the liquidator. It happens when a company is not able to repay its debts.

By court

Under this, the court is taking initiative in liquidating a company. It is also known as compulsory liquidation. Here the court is choosing the liquidator. The court is initiating a liquidation procedure on the basis of a legal petition by a creditor such as a bank or a financial institution.

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