What actions can a liquidator take to recover company assets?

Can a liquidator recover assets for the benefit of creditors?

If a company is facing insolvency, it is the duty of the directors to enlist the help of an insolvency practitioner at the earliest possible opportunity. The insolvency practitioner will assess the situation and advise whether the business can be saved, or whether steps should be taken to bring the company to an end. Should it be decided that the company is beyond rescue, the insolvency practitioner will take control of the company and place it into liquidation.

What happens to company assets in liquidation?

One of the main parts of a liquidation process is for the insolvent company's assets to be identified and located by the appointed insolvency practitioner. This is because a liquidation procedure is designed to allow creditors to recover as much of the money they are owed by the insolvent company as possible. 

Company assets are sold during the liquidation in order to realise as much money as possible for the benefit of the company’s outstanding creditors.

In the case of insolvent company liquidation, there will simply not be enough money raised in order to pay every creditor in full unfortunately, however, the appointed insolvency practitioner will look to repay creditors as far as possible according to a set hierarchy as set out in the Insolvency Act 1986.

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How does a liquidator maximise asset values during liquidation?

It is a liquidator’s primary duty to realise as much money as possible for the creditors. A liquidator acts in the best interests of the creditors so it is always their main objective to be able to distribute the maximum to each one. This means as much money as possible must be extracted from the company and its assets.

All company assets will first be identified and located by the insolvency practitioner. Assets will then be independently valued to ascertain their market value. A suitable sales process will then commence which may involve selling these assets via an auction or directly to a connected or unconnected party of the insolvent company such as a competitor.

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Identifying concealed assets and antecedent transactions

As part of company liquidation, insolvency practitioners are obligated to investigate the conduct of the directors in the months and years leading up to the company’s demise. In the vast majority of cases, a company becomes insolvent despite the best intentions of its directors. If the liquidator is satisfied that no malicious behaviour has occurred then the liquidation will be allowed to go ahead with no further action taken against the directors.

However, the appointed insolvency practitioner will be on the lookout for any instances of wrongful trading, misfeasance, or fraud.

If a preference payment or transaction at undervalue has been made, the insolvency practitioner can ask the court to reverse these transactions and have the money returned to the company so that it can be fairly distributed amongst all outstanding creditors.

How Real Business Rescue can help

If your company is insolvent, or you are concerned that it is heading that way, contact the experts at Real Business Rescue. Our dedicated team of licensed insolvency practitioners can help you understand your current situation and advise on the next best step for you to take. Real Business Rescue provide director advice online, over the phone, or in-person at one of our nationwide UK offices or a place of your convenience. You are never far away from expert advice you can trust. Call us today.