The First Duty of a Liquidator

In the matter of Re Southern Pacific Personal Loans Limited [2013] EWHC 2485 (Ch) it was considered whether or not Liquidators were data controllers for the purpose of personal data processed by an insolvent company prior to commencement of the liquidation.

It was held that Liquidators were not data controllers for that period. The court did not decide that the company in liquidation should not respond to the request, only that the liquidators were not obliged to do so.

The case threw up considerations of the role of the Liquidator as agent for the company and notably confirmed the duty of a Liquidator to take into their custody or under their control all the property of the company:

Unquestionably this is the first duty of a liquidator, recognised as such in the context of a creditors’ voluntary winding up by section 166(3) which provides:

“Subsection (2) does not apply in relation to the power of the liquidator –

(a) to take into his custody or under his control all the property to which the company is or appears to be entitled;

(b) to dispose of perishable goods and other goods the value of which is likely to diminish if they are not immediately disposed of; and

(c) to do all such other things as may be necessary for the protection of the company’s assets.”

This is bolstered by the provisions of section 234 of the Insolvency Act 1986 which applies to administrators and administrative receivers as well as to liquidators, all of whom are defined as “the office-holder” for the purposes of the section. Section 234(2) provides:

“Where any person has in his possession or control any property, books, papers or records to which the company appears to be entitled, the court may require that person forthwith (or within such period as the court may direct) to pay, deliver, convey, surrender or transfer the property, books, papers or records to the office-holder.”

The declaration I am making on this application relates to voluntary liquidators, but I do not think that the position is different as regards liquidators in a compulsory winding up. The continued ownership by a company of the legal title to its assets, the powers conferred by schedule 4 on liquidators and the capacities in which liquidators act are generally the same in both types of liquidation. Section 143(1) of the Insolvency Act 1986 provides that “the functions of the liquidator of a company which is being wound up by the court are to secure that the assets of the company are got in, realised and distributed…” Section 144(1) provides that “when a winding-up order has been made…the liquidator…shall take into his custody or under his control all the property and things in action to which the company is or appears to be entitled.” The liquidator must secure or take control of the assets of the company but they are not vested in him, as is made clear by section 145 which expressly provides that the court may on the application of a liquidator in a compulsory liquidation direct that all or any part of the property belonging to the company shall vest in the liquidator by its official name. The authorities to which I have referred deal with compulsory as well as voluntary liquidations and make clear that as regards the status of the liquidator there is no material difference between them.

The aforesaid is not legal advice and is not to be relied upon as such. No liability is accepted by the writer for any reliance placed on the same.

If you have a specific query then you should seek independent legal advice on the same.

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