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257) When a company goes into a creditors’ voluntary winding up, who appoints the liquidator?
Good day sir,This answer is confusing to me because the textbook states that both the members and the creditors have the right to appoint a named insolvency practitioner as liquidator. In the event of a dispute, the creditors’ nominee prevails.I’ll appreciate if you can explain better
Where the directors have realised that the company is no longer able to continue by reason of its debts, they must convene a meeting of members – the purpose of that meeting is to pass a resolution formally to put the company into liquidation. Additionally, the members will NOMINATE the person that they would like to conduct the liquidation process
Typically on the same day (actually, typically half an hour after the members meeting) a meeting of creditors will take place. The directors will tell the creditors that the company has been placed into a voluntary liquidation by the members passing a resolution and that the members have nominated a person the the members would like to see conducting the liquidation process
And then! The directors say to the assembled creditors ” …unless, of course, you would like to nominate and appoint someone other than the members choice”
If the creditors choose not to exercise their right to nominate someone other than the members choice, then we can see that the members have nominated the person and the creditors, by their inaction, have accepted the members nominee
BUT! If the creditors choose to reject the members nominee and appoint someone different, then clearly it’s the creditors that will appoint their own choice to conduct the exercise
I believe that that should clear up the fog in your mind 🙂
Thank you sir
Again, you’re very welcome