← Lessons 02-Business and Company Law
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Law of Contract Sole Traders Partnerships Limited Liability Partnerships — LLP Limited Companies Public Limited Company — PLC Private Limited Company Company Formation & Registration Certificate of Incorporation Private Company → Public Company Company Registers Company Accounts Share Capital Directors Company Secretary Auditors Annual General Meetings — AGM Proxies Company Reports People with Significant Control — PSC Winding Up / Liquidation Liquidator's Duties Bankruptcy ⭐ Key Exam Numbers to Remember

Liquidator's Duties

The liquidator must:

  • Sell/realise company assets.
  • Pay debts and expenses.
  • Distribute any remaining balance to shareholders.
  • Seek to maximise the return to those owed money.

Order of Priority

  1. Liquidator's fees and expenses
  2. Preferential debts — mainly employee wages
  3. Unsecured debts — including HMRC and trade creditors
  4. Shareholders
    • Preference shareholders generally before ordinary shareholders.
    • In compulsory liquidation, the liquidator can apply to the court to dissolve the company once assets have been dealt with.
    • Voluntary liquidation does not involve the court in the same way.

Wrongful Trading

  • Can arise where directors continue trading recklessly when there is little prospect of the business continuing.
  • Applies in an insolvency situation.
  • Directors may be ordered to repay creditors from their own money.