Company's Winding Up: Functions of a Liquidator (2)

This is a continuation from the first part of the article of the same title.

Compulsory Winding Up

The court may appoint an interim liquidator at any time after the presentation of a winding up petition and before a winding up order is made. The interim liquidator shall have and may exercise all functions and powers of a liquidator.

Where a person, other than the Official Receiver, is appointed as the liquidator, the Official Receiver shall oversee the conduct of the liquidator. If the liquidator breached his or her duties; or if there is any complaint made by any creditor or contributory in regards to the performance of his duties, the Official Receiver shall inquire into the matter and take actions as he or she sees fit. The liquidator may be required to answer inquiries and investigation may be directed against the liquidator.

Where a winding up order has been made, the liquidator shall take into his or her custody or control all the property to which the company owns. The liquidator may apply to the court for the property to be vested in him or her and for him or her to bring or defend an action which relates to the property or for the purpose of effectually winding up the company.

The liquidator shall also cause the company's property to be collected and applied to discharging the company's liabilities and consider whether the settlement of a list of contributories is necessary. The liquidator may rectify the register of the members where rectification is required.

After receiving the statement of affairs of the company from the directors and secretary, or any other person as the case may be, the liquidator shall file a copy with the Court and lodge a copy with the Registrar. Thereafter, the liquidator shall, as soon as practicable, submit a preliminary report consisting the following to the Court:

1. the amount of capital issued, subscribed and paid up and the estimated amount of assets and liabilities of the company;
2. the reasons of the failure of the company;
3. whether further inquiry as to matters relating to promotion, formation or failure of the company or its conduct of business is desirable.

The liquidator may in further report state:

1. the manner in which the company was formed and whether there was any element of fraud or any material fact has been concealed in relation to the company;
2. whether any officer of the company has breached its duty or failed to comply with CA 2006; and 3. any other matter which he or she thinks necessary to be brought to the Court's attention.

General powers and duties

With the authority of the Court or the committee of inspection, the liquidator may exercise the powers specified in Part II of the Twelfth Schedule as follow:

1. carry on the business of the company so far as necessary for the beneficial winding up of the company;
2. pay any class of creditors in full (subject to their priorities under s.527);
3. make any compromise or arrangement with creditors or any other interested persons;
4. compromise any calls and liabilities to calls, debts, claims between the company and a contributory or other debtor, and on all questions in any way relating to the assets or the winding up of the company, and take security for the discharge and give a complete discharge in respect of the call,debt, liability or claim; and
5. compromise a debt due to the company that exceeds RM10,000 (authority may also be given by the Court or committee of inspection where the debt does not exceed RM50,000).

Without the authority of the Court or the committee of inspection, the liquidator may exercise general powers under Part I of the Twelfth Schedule as below:

1. bring or defend any legal proceedings in the name and on behalf of the company;
2. compromise any debt due to the company except for calls and liabilities for calls and a debt less than RM10,000;
3. sell the property and things in action of the company with power to transfer them to the purchaser, or to sell them in parcels;
4. Do all acts and execute all deeds, receipts and other documents in the name and on behalf of the company, and use the company's seal when necessary;
5. Prove rank an claim against his or her estate in the bankruptcy of any contributory or debtor for any balance and receive dividends in respect of that balance;
6. Draw, accept, make and indorse any bill of exchange or promissory note in the name and on behalf of the company;
7. Raise money on the security of the assets of the company;
8. Take out letters of administration of the estate of any deceased contributory or debtor, or any other act necessary for obtaining payment of any money due, which cannot be conveniently done in the name of the company;
9. Make any payment as necessary in carrying on the affairs of the company in its ordinary course of business;
10. Appoint any agent to do any business which the liquidator is unable to do;
11. Appoint an advocate to assist him in his duties; and
12. Do anything that is necessary for winding up the affairs of the company and distributing its assets.

Exercise and control of liquidator's powers

The liquidator should always use his or her discretion in the management of the affairs and property of the company and the distribution of its assets. However, the liquidator shall, in the administration of the assets and its distribution, have regard to any directions given by resolution of the creditors or contributories or the committee of inspection. In case of conflict, the directions given by the creditors or contributories shall override. The liquidator may also apply to the Court for directions in relation to any matter arising under the winding up.

Any money received by the liquidator shall be paid into such bank account as prescribed or as specified by the Court.

The liquidator may apply to the court for an order that he be released and that the company be dissolved if he or she has:

1. realised all the property of the company or so much that can be realised without having to prolong the liquidation;
2. distributed any available final dividend to the creditors;
3. adjusted the rights of the contributories; and
4. made any available final return to the contributories.

Where the court has ordered for the liquidator to be discharged, the liquidator shall, within 14 days from the order, lodge a copy of the order with the Registrar and the Official Receiver. The company will be dissolved on the date in which the order for its dissolution is made by the Court.