The site which answers your questions on insolvency, liquidation, receivership and administration
Frequently Asked Questions
How do I have my claim in a liquidation recognised?
When a liquidator is appointed he is required to write to all known creditors of the company providing a Liquidators First Report and inviting creditors to lodge their claim on a creditors claim form provided.
If you have not received any communication from the liquidator of a company within (say) 10 days of the liquidation being advertised, you should contact the liquidator and request a Liquidators First Report and creditors claim form.
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Can the liquidator of a company be changed?
There is brief period when a liquidator can be changed. Within 10 days of receipt of the Liquidators First Report, you may require the liquidator to call a meeting of creditors for the purposes of appointing a new liquidator whom you have nominated.
After the 10 day period has expired a liquidator may only be removed by application to the High Court.
Can the Creditors have any influence on a liquidator?
Most certainly. The Companies Act allows for the election of a liquidation committee comprised of creditors or their representatives. The liquidator is bound to meet with this committee and to hear their concerns as well as provide updates on the progress of the liquidation.
You can request the liquidator at any time to call a meeting of creditors for the purpose of electing a liquidation committee.
What can creditors do if they are unhappy with the performance of a liquidator?
It is recommended that the creditors seek a meeting with the liquidator to discuss the concerns which they have.
If they remain unhappy with the performance of the liquidator they may petition the Court to have the liquidator replaced. You should bear in mind that there are costs involved in this process, and the Court will not lightly dismiss a liquidator without proof that his actions have been unsatisfactory.
I’m a Mainzeal Subcontractor What Can I do?
The collapse of Mainzeal Property and Construction Limited has been a wakeup call to many in the building industry. Since the repeal of the Wages Protection and Contractors' Liens Act in 1987, there has been little protection afforded to subcontractors in the construction industry. The Construction Contracts 2002 was introduced to bring in a system by which subcontractors could enforce their contract claims against head contractors, regardless of whether the head contractor had been paid by its principal.
However, the new Act has merely widened the scope for head contractors to find and document reasons for not paying subcontractors claims on time. The principal deficiency of the Act however is in the area of retentions, which for most subcontractors will include their profit margin for the work performed. Retentions can be and are withheld by principals, often for unjustified reasons. Unless the head contractor is prepared to go to Court to challenge them, the retentions can be withheld for years. We have a liquidation currently where the principal, a Government Department, is claiming a right to 20 years retention over workmanship guarantees.
In the Mainzeal situation decisions will be taken by its receivers, who are accountable to the bank which appointed them. The bank is a secured creditor and all recoveries, net of receivership costs and preferential creditor payments, will go to the bank in reduction of its lending. Subcontractors are unsecured creditors, along with the many principals who will be left with partly completed Mainzeal buildings or other claims against the company. Unsecured creditors are unlikely to receive anything more than a token distribution from the receivership.
Subcontractors and other unsecured creditors are therefore only likely to receive a recovery if a liquidator is appointed to Mainzeal. Unlike receivers appointed by a secured lender, liquidators are appointed to represent the interests of all creditors and have access to avenues for recovery which receivers do not. In particular, actions against directors for reckless trading, and the setting aside of voidable payments.
Liquidators can be appointed through a petition to the Court by a creditor or creditors. Gerry Rea Partners often accept appointment as liquidators by the Court.
Can anyone be appointed liquidator of a company?
Although there is no register of insolvency professionals, there are a number of prohibitions from accepting appointment. These are set out in Section 280 of the Companies Act 1993.
Prohibited persons include those who have in the two preceding years served as shareholders, directors, auditors or receivers of the company or a related company. Persons who have had a continuing business relationship with the company, its majority shareholder, directors or secured creditors are also prohibited from acting, unless the directors resolve prior to their appointment that the company will be able to pay its debts.