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Liquidators lacking finance not good enough…

By February 9, 2015No Comments

A common issue (by definition) facing liquidators is a lack of money for investigatory purposes. Is this really a good reason for not undertaking a thorough investigation? Apparently not because as Millett J in Re Keypak Homecare Ltd [1987] BCLC 409 noted, this is usually known to the liquidator before he or she takes on the job and therefore it may not be sufficient to plead poverty later on when creditors come knocking on the door for action:
“A liquidator who can see from the statement of affairs that there are likely to be insufficient assets to enable him to discharge his duties ought to make the position clear at the meeting of creditors and insist on being authorised by those present at the meeting to take such steps as may be necessary. But simply to stand back and do nothing and then claim that that is justified by the lack of finance is not, in my judgment, good enough.”
Perhaps more generally this was expressed in a different context in A & J Fabrications Ltd v Grant Thornton [1998] 2 BCLC 227:
“Those who undertake the task of being liquidators should reasonably expect to have to do their job properly, and should reasonably expect that if they do not do so they are answerable to those ultimately for whom they are acting, namely the creditors.”

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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