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If the company continues to trade and incur more debt, you may be personally liable and could face prosecution for reckless or insolvent trading.
Broadly, the duties of a Liquidator divide into two categories, the first principal duty being: “To take possession of, protect, realise, and distribute the assets, or the proceeds of the realisation of the assets, of the company to its creditors in accordance with this Act; and if there are surplus assets remaining, to distribute them, or the proceeds of the realisations of the surplus assets, in accordance with section 313(4) of this Act; In a reasonable and efficient manner.” The second principal duty of a Liquidator is to report on the affairs of the company and the conduct (including any proposals for the conduct of the liquidation) to the creditors, shareholders and the Registrar of Companies.
In certain respects it is an extension of the common law priority given to properly appointed “salvors” for their reasonable costs and expenses incurred in salvage work which benefits persons with a prior ranking claim in respect of relevant assets.
These rank as a first priority to the Liquidators costs and expenses pursuant to Schedule 7 paragraph 1(1) (a).Section 1(1)(e) of the Seventh Schedule of the Act provides for any creditor who protects, preserves the value of, or recovers assets of the company for the benefit of the company’s creditors by payment of money or giving of an indemnity,- (i) The amount received by the Liquidator by the realisations of those assets, up to the value of that creditors unsecured debt; and, (ii) The amount of the costs incurred by that creditor in protecting, preserving the value of, or recovering those assets.This category of preferential claim was introduced by the Companies Amendment Act 2006 and is intended to “provide an incentive to creditors to financially assist a Liquidator in recovering or preserving a business’s assets”, ultimately to the benefit of all creditors.Once a Liquidator is appointed the Liquidator has total control of the company, and while the directors remain in office, they cease to hold any powers.A Liquidator acts in the statutory capacity as an agent for the company in liquidation.
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Staff wages earned but not paid in the last four months prior to liquidation, and all holiday pay (up to a maximum of $18,700.00) per employee, are paid in priority to unsecured creditors.