Who appoints an Insolvency Practitioner in a Voluntary Liquidation?

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Who appoints an Insolvency Practitioner in a Voluntary Liquidation?

The general answer is the shareholders appoint the Liquidator. What actually happens is Directors will come to see us to get some advice, we’ll discuss various options and if the option that is chosen is to place the company into Voluntary Liquidation, the Directors then ask us to assist them. Part of that process is the Directors recommending to the shareholders that the company goes into Liquidation and that we be appointed as the Liquidators.

A meeting of shareholders is called, the shareholders consider the resolutions and, providing they’re satisfied, they vote to pass the resolutions. So the formal appointment of us as Liquidators is actually by the shareholders. In most cases, the Directors and the shareholders are the same people. So everybody knows everyone’s already in agreement that we will be appointed as the Liquidators.

There is the option for creditors to appoint the Liquidator because, whilst the shareholders appoint us in the first instance, part of the process of Liquidation is what’s called a deemed consent procedure. This is where creditors are told the company’s going into Liquidation, the shareholders will pass a resolution to put it into Liquidation appoint us as Liquidators and if there’s no objection from creditors, that process will just happen, our appointment will be confirmed and the Liquidation will continue. However, creditors can if there’s sufficient of them in number or value, they can object to the deem consent procedure and ask for a creditors meeting to be called. If a creditors’ meeting is called, at that stage, one of their options is nominate different Liquidators. At that stage creditors would then vote on either our appointment or any other nominated Liquidator and the Liquidator with the most votes, in value, would then be appointed.

So in summary, in most cases, the Liquidators are those chosen by the Director, who is also usually the shareholder, and creditors generally, accept that nomination. However, on very rare occasions, creditors can replace that Liquidator at a meeting of creditors.

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