The Business Debt Advisor

Creditors' Voluntary Liquidation - FAQ's

What happens at a creditors meeting?

Directors are often fearful of facing creditors at the meeting which, by law, has to be convened to place the company into liquidation. Generally, the fear is misplaced especially if the directors can demonstrate that they have tried their hardest to minimise the loss to creditors.

Quite often creditors won't bother turning up to a creditors' meeting especially if they have been kept informed of the process and are happy that the Insolvency Practitioner "IP" is protecting creditors' interests.

One of the directors needs to chair the meeting, but will be assisted by the IP. The IP will go through the report that has been presented to the meeting and help the directors to answer any questions that creditors might ask. The formal bit of the meeting is to appoint a Liquidator. The shareholders will have met earlier in the day and appointed an IP as Liquidator, and usually, creditors will support this nomination unless they feel that the IP is not sufficiently independent or has not, so far, done a good job.

What are the directors' duties once the company has been wound up?
The directors/officers of the company have a duty to co-operate with the Liquidator (S235 IA1986) and provide information about the assets, liabilities and the company's affairs. This duty also extends to those who are or have been in the employment of the company (this includes the company's accountant).

The Liquidator needs to obtain control of the company's books and records and and it would not be unreasonable to expect the directors to help with boxing and cataloguing the records. The directors may have information about the company dealings which they need to pass on. If the directors/officers fail to co-operate the liquidator can obtain a court order compelling them to do so.

The Liquidator will also send to each director a questionnaire to complete which will form part of the Liquidator’s enquiries into a directors' conduct. Failure to complete the questionnaire will be reported to the Department of Trade and Industry ‘DTI’. The staff at the DTI considers each director’s conduct and whether disqualification proceedings are appropriate.

 

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