Investigations By Liquidator Overview
What investigations does a Liquidator undertake? A Liquidator has a duty to investigate a company’s affairs because he or she has Liquidator duties to recover the company’s assets.
Assets may be disclosed and they may be undisclosed. Undisclosed assets will need to be discovered and they may take the form of claims as opposed to physical assets.
A Liquidator, therefore, undertakes investigations so that the company’s assets after the costs of the Liquidation have been paid, are available for creditors in accordance with the Statutory Order of payment in insolvency proceedings.
A Liquidator’s investigations will involve those required by regulators such as Director Conduct Reporting In A Liquidation.
Ultimately an investigation seeks to unscramble matters given a Liquidator enters office as a stranger to the affairs of a company. Once the assets have been identified then a Liquidator’s investigations may develop into a search for evidence to address any disputes over assets that may arise.
What Specific Investigations Does A Liquidator Undertake?
A Liquidator has a good deal of discretion as to how he or she embarks upon their investigations. Each case is different and that can mean a preconceived approach may be outflanked by how the case develops. Experience is a powerful skillset in the forensic Liquidator’s toolbox.
An investigation can be document focused and it can be witness focused. In many instances where documents are missing or leave uncertainty about the merits and intentions of transactions, a fact finding exercise can commonly be deployed by interviewing relevant individuals such as Directors and employees who may have been responsible for the same.
Company Records Review
The specific investigations a Liquidator undertakes will depend on the facts of the case.
The starting point of any investigation by a Liquidator is to obtain the records kept by the company. Those records will need to be reviewed and a listing made of them in general terms to identify what might be missing.
A company’s records should enable the identification of its income, expenses, assets and liabilities.
It is not unknown for Directors to hand over records to a Liquidator that appear to be incomplete. What is missing might offer insight as to what might need to be looked into further.
Assembling Accounting Records
Company records for small companies will often be concentrated on transactions that might be reflected in company bank statements and a company’s accounting systems. Accounting records even when they are held electronically will be part of the company’s records and a Liquidator will need to take possession of them.
However, there are other records that are summaries of the transactional records such as statutory accounts filed at Companies House and tax returns for HMRC. It is commonplace for those records and the work that has gone into their creation to be done by a tax agent and or accountant.
Tax Agent And Accountant’s Files
Given company records can often be disorganised it can be very useful to obtain tax agent or accountant’s working files if a company has made use of the services of a professional person for creating statutory accountants and preparing tax returns.
Obtaining such files can involve matters of entitlement and therefore pursuing such matters can be at the Liquidator’s discretion, particularly if there are no funds available to escalate matters if court direction might be required to resolve any dispute.
Oliver Elliot Liquidator Investigation Approach
At Oliver Elliot we look to undertake a proportionate investigation that, subject to funding considerations, aims to discover the significant available assets that might or could be made available to attempt to produce recoveries for creditors.
In most Liquidation cases (but not all), we deploy a diligent approach to obtain both the company records as well as those who have acted for the company, such as accountants, solicitors, bankers and other professional agents. We are well-equipped to address the legal arguments that may arise over entitlement to the files of professional working papers.
