What are Company Liquidators most afraid of?

[Lesson268]

I am working with a liquidator who are not exactly going the extra mile to investigate a company that owes me a lot of money, where i believe there is fraud involved or certainly director misconduct. What is the liquidator most afraid of, or how can i get them to do their job properly? Bad publicity? Would the liquidator be worried if i get the Police involved, as this could be considered criminal?

Are you funding the work of the liquidator?

A liquidator must be authorised by a recognised professional body (RPB). Find out who their RPB is.
They will not go "the extra mile" to placate creditors; they will follow the law.

To be honest, although they have a duty to investigate, but there’s only a certain amount they can do with directors cooperation. I worked for an Insolvency Practitioner for over 25 years and he went the extra mile to try and get creditor’s their money, including taking the director’s to Court, paying with his own money, to get them to hand over paperwork and information, but If someone wants to cover up anything, or disappear they often did unfortunately.

@Lesson268 Who do you believe has committed this fraud?

Thanks - surely someone has to regulate them? I'm owed tens of thousands. In that case they're just going to let anyone scam people and wonder off into the sunset and get away with it scot free? Surely there should be sanctions at the very least? When i say go the extra mile, i meant within the law - they should be doing their job to the letter, not letting things slide..

No, like most cases the liquidator gets paid out of the money left in the company, if any - but they should be making the director personally liable, as there has been director misconduct and tbh, they wouldn't even be having these conversations with me if they didn't believe that to be the case. The director just isnt responding to their enquries - but i understand it can be forced with a solicitor, of which they will have an in-house one

I'd guess they're afraid of going bust themselves.

Spending a lot of time investigating fraud when there may or may not be money at the end of it isn't a good business model. They will want bulk volume work, the easiest to pass through system and bill clients for work. Not to get tangled up in lengthy fiddly disputes with possibly no outcome in terms of money recovered.

Sorry, I know it's infuriating and distressing. But they watch the bottom line or they'd go bust too.

The best precaution is due diligence (including on an ongoing basis) and business insurance, easier said than done I realise.

Ok understood, but will the Police get involved, because this is a serious amount of money that's gone missing and there are a lot of suspicious circumstances.

Who can i escalate this with, because someone needs to do something?

If you believe a crime has been committed, then report it yourself to the police.

Firstly the liquidator does not work for you and. You are just one of many creditors.

What misconduct do you think happened? It is impossible to have an opinion on this without knowing the details.

Liquidators will look for certain types of mismanagement such as sales of assets below market value, trading while insolvent, or payment of dividends while insolvent but there is a limit to what they can do. A lot of things people think should be fraud are morally iffy but are in fact perfectly legal.

There may not be enough assets in the company to fund the litigation/investigations you want them to make. How otherwise do you think the liquidator and their lawyers get paid?

surely someone has to regulate them

A liquidator must be licensed and regulated by a recognised professional body.

As the previous poster says, the liquidator does not work for you and there is a limit to what they can do.

I have come across a number of cases where people owed money by insolvent businesses believe there has been fraud or some other form of misconduct when in fact the directors have done nothing wrong. You may have a case but, without knowing more, it is impossible to say.

Liquidator are always paid. Either out of the funds of the liquidated company or through official channels.

OP - if you believe that a fraud has been committed in some way, then report it to the police.

I work in the accounts department of a business, and a number of our commercial customers have gone into liquidation over the years, one of which only happened a fortnight ago. I am very familiar with the work of liquidators, and they have to follow specific guidelines. They can only pay out to people owed money once they have finished their job, and that will sometimes take several years, particularly if they come across any sign of financial mismanagement or fraud within the company's books. And they will be looking for that, trust me.

You and most other people will be way down the list - HMRC and the VAT people are at the top, then what they call 'preferential creditors', then everybody else.

Has the liquidator asked you for information about what the company owes you, and how and why that debt has come about, and have you provided them with it?

I will, but the liquidator holds all the evidence and atm they're not sharing with me what he has done with the funds that were supposed to be paid to me and from what point the company became unable to pay its creditors - all this will be required by the Police to even start an investigation

I don't think you entirely understand how a liquidation takes place.

Have the liquidators asked you to provide information about the money owed to you by this company? Copies of paperwork, invoices and so on?

I had to liquidate a company many years ago - in our case due to an overseas distributor going bust owing us £40k -small fry I know but was enough to make us unable to pay HMRC and several smaller suppliers to us. In my experience liquidators make sure they get paid first and foremost and are more than happy to bill the company £140 an hour ( if money still available or coming in) for straightforward uncomplicated admin - personally I think it should be set up as a national liquidation service and charged at 'sensible' levels.

Obviously i cant go into the details of it as this is a public forum but what i can say is that the liquidator did not look into this properly the first time, and i made a formal complaint to them, and received an apology and they are now re-visiting it, so it appears liquidators do not always do their job properly because the report they did submit highlights concerns - although just not to the extent it should have done, as the director has not explained large transactions leaving the account. I am wondering whether some publicity may kick the liquidator into touch as this is a public figure, and they were quick to advertise the fact they were doing the liquidation on social media

How long ago did the company go into liquidation?

I'm quite good at finding my way round Companies House records by the way, if you want to PM me the name. It is all a matter of public record anyway so no harm looking, I might spot an avenue for you to pursue.

Yes but the police will ask the liquidators for the information. The liquidators have no legal requirement to share anything directly with you.

Liquidators do have a legal obligation to consult with creditors and to share certain information with them during the liquidation process.

I got a set of reports only the other day from the liquidators of one of our customers at work who went down the drain recently. Dull as ditchwater as they are, it is obvious from the figures that we won't get anything at the end of it.

How do i get the police to follow up on this - as normally the brush off anything fraud related and tell you contact action fraud, and action fraud are pretty much a shell organisation that do nothing..

I need to get a police crime number in any case as the liquidator claims not to have all the statements, when they could just request them from the bank!

Insolvency practitioners have to report to the Insovlency service on the conduct of the directors so they can consider potential disqualification. If you have evidence (and I mean real evidence, not just that you’re upset you’ve lost your money) of misconduct then provide it to the insolvency service.

You aren’t necessarily entitled to all the info the liquidator has or any investigations.

Do you realise that HMRC and Customs & Excise have first claim on any unallocated funds? The liquidators will take their fees and then HMRC etc will take what they estimate to be due to them, same with C&E. It is likely that those two creditors will soak up any of the funds that remain, if there are any.

Of course I realise you want to punish the directors for their actions, but there has to be a clear indication that the time spent pursuing those claims will be funded somehow and that there's a realistic expectation of a successful action.

Liquidators operate in line with the Insolvency Act and follow clear procedures to balance the rights of creditors, including in cases of directors misconduct. You are describing a fairly common situation in cases of insolvency.

You are alleging misconduct by directors which should be reported to the Insolvency Service (who can direct the liquidator to release information) or a crime which should be reported to the police (who can obtain evidence from the liquidator through a criminal investigation).

if you believe the liquidator is not fulfilling their duties under the Insolvency Act you should report to the Insolvency Service or the practitioner’s regulator. There are several possible regulators, the correct one will be on their website.