Liquidation Birmingham

4. Powers of a trustee or liquidator

A creditors' or liquidation committee will be appointed at a gathering of creditors, and consists of at least 3 and no more than 5 elected creditors or their representatives. The committee's purpose is to guard and promote the interests of the creditors and, where acceptable, the shareholders. The committee can meet to consider the overall progress of the bankruptcy or liquidation, and any matters that are of interest to the committee. The trustee or liquidator should write a report for the committee at least once every six months, or a lot of typically if required by the committee, however not more often than once each 2 months. The trustee or liquidator should keep separate financial records for each bankruptcy or liquidation, and these are open to inspection by the committee.

The committee additionally controls the costs and expenses of the bankruptcy or liquidation, and this is often controlled below in section five. The powers of a trustee or liquidator are embarked on within the Insolvency Act 1986, the Insolvency Rules 1986 and also the Insolvency Regulations 1994. Some of these powers will only be used with the permission of the creditors' or liquidation committee or the court, whereas others will be used
while not permission. Examples of the powers that can solely be used with the permission of the committee or the court are:

• the ability to carry on the business of the bankrupt or company therefore so much as may be necessary for
• the good thing about the creditors;
• the facility to bring or defend legal actions regarding the property of the bankrupt or company;
• the power to come to a compromise with creditors of the bankrupt or company about their debts;
• the facility to sell the property of the bankrupt for a total of cash payable in the longer term; and
• the ability to mortgage the property of the bankrupt to raise money to pay the bankrupt's debts.

4

The trustee or liquidator must tell the committee once they use a solicitor to help them, or if they dispose of any property of the bankrupt or company to an individual connected with that bankrupt or company. However, they do not want the committee's permission. If the trustee or liquidator has done something for which they require the committee's permission however did not get it beforehand, the committee could still approve what has been done. The committee ought to solely approve if they're satisfied that the trustee or liquidator had to act as a matter of urgency and has since sought their approval without undue delay.

If no committee is appointed, then the Secretary of State acts as the committee (in follow this can be the Insolvency Practitioner Unit of the Insolvency Service, acting on behalf of the Secretary of State). The trustee or liquidator then desires the permission of the Secretary of State or the court to use these powers.

Some of the powers of the trustee or liquidator will be used while not the necessity to urge permission.

Examples of these are:

• the power to sell the property of the bankrupt or company (as long as it's not for a total of money payable in the longer term);
• the power to act and to sign documents in the name and on behalf of the bankrupt or company;
• the facility to use an agent; and
• the power to try and do all other things necessary for concluding the affairs of the bankrupt or company.

five. Payment of a trustee or liquidator

A trustee or liquidator is entitled to be purchased the work they are doing. The number they are paid will be calculated:

• as a percentage of the value of the assets realised or distributed (or both); or
• on a time-and-rate basis - where an hourly rate is charged for the time spent on dealing with the bankruptcy or liquidation.

If a creditors' or liquidation committee has been appointed, the committee should settle on which basis the payment to the trustee or liquidator is to be calculated and, where necessary, the percentage to be used. If there's no committee, then the basis on that the trustee or liquidator is to be paid, and also the quantity they're to be paid, can be agreed at a gathering of creditors. When fixing the premise of the trustee's or liquidator's remuneration, the creditors must have regard to the subsequent:

• the complexity (or otherwise) of the case;
• any exceptional kind or degree of responsibility that falls on the trustee or liquidator in connection with the bankruptcy or liquidation;
• how effectively the trustee or liquidator appears to be polishing off, or to have meted out, their duties;
• the worth and nature of the assets that the trustee or liquidator has to deal with.

If payment is agreed on a time-and-rate basis, the trustee or liquidator is paid in step with the quantity of hours they and their employees have spent operating on the bankruptcy or liquidation. The hourly rate paid is set by the trustee or liquidator.

Information: http://www.bis.gov.uk/assets/bispartners/insolvency/docs/publication-pdfs/trusteesandliquidators.pdf

Technorati Tags: liquidation Birmingham