What is the role of a Liquidator in Compulsory Liquidation?
Section 272 of Companies Act (Cap. 50) states the liquidator is to:
a) investigate into the affairs and assets of the company, the conduct of its officers, and the claims of the creditors and third parties;
b) recover and realise the assets in the most advantageous manner to the company; and
c) adjudicate the claims of the creditors and ensure an equitable asset distribution in accordance to the order stated under Section 328 of the Companies Act:
a. cost and expenses of winding up, including the taxed cost of applicant and the remuneration of the liquidator;
b. wages or salary including allowance or reimbursement that does not exceed an amount that is equivalent to five (5) months’ salary or S$12,500, whichever is lesser;
c. retrenchment benefits or ex gratia payments under employment contract that does not exceed an amount that is equivalent to five (5) months’ salary or S$12,500, whichever is lesser;
d. all amounts due in respect of workmen’s compensation under Work Injury Compensation Act (Cap 354) accrued before, on or after the commencement of winding up;
e. contributions payable by the company as employer;
f. all remuneration payable to any employee pertaining to vocation leave, accrued in respect of any period before, on or after the commencement of winding up; and
g. all tax assessed under any written law before the commencement of the winding up or assessed at any time before the time fixed for the proving of debts has expired.
After payment of these preferential claims in full, the balance is then paid pari passu to all ordinary creditors. Thereafter, to make a capital repayment to shareholders with the leave of the Court. The shareholders are paid in proportion to their respective interests in the share capital of the company.
The Company’s assets are:-
a) Cash in hand and in the banks, and all other financial institutions;
b) Book debts disclosed in the Statement of Affairs;
c) Sale of office fittings and properties owned by the company;
d) Call in unpaid capital;
e) Recovery of assets from dispositions made by the company, including:
i. things in action and transfer of shares after the commencement of the winding up not sanctioned by the Court; and
ii. overdue preference given to certain creditors and transactions made to creditors at below valuation prior to winding up.