What is an Official Receiver?
Posted on 7th January 2022 at 13:17
An official receiver is a civil servant of the court to act in cases of compulsory liquidation and bankruptcy. He is employed by the insolvency service to act as the provisional liquidator in case of compulsory liquidation, in voluntary liquidation. An official receiver is appointed liquidator by the secretary of the State to the County Court. On the making of bankruptcy or winding-up order, the official receiver assumes control and protects the insolvent estate.
An official receiver or a provisional liquidator is appointed in some insolvency cases, from the time a winding-up petition is presented to the court by the petitioner who believes that the assets of the company might be sold or that another creditor may be treated preferentially by the debtor company.
The official receiver is responsible to safeguard the company’s assets and record till the winding-up hearing. If a winding-up order is afterward passed by the court, the official receiver is to report to creditors and shareholders on the assets and liabilities of the company. If necessary, he may also report to the court. If the assets are sufficient to meet the liabilities, then the official receiver may request the Secretary of the State to appoint another liquidator or ask the creditors to do so. If no other liquidator is appointed by the Secretary of State or company’s creditors then he will remain in office and administer the process, which involves identifying the assets to be sold, arranging for their valuation and sale, distributing the proceeds equitably among the creditors using statutory order. As a liquidator, he may decide whether to complete any outstanding contract after consultations with the main creditors of the company.
One of the primary functions of an official receiver is to investigate and establish the circumstances which led to the company’s insolvency, once the process of liquidation is over. During the investigation, the official receiver will scrutinise the company’s financial records, interview the directors, make enquires with third parties about the company’s accounts. If any undisclosed assets are found during the investigation, the liquidator is informed accordingly.
The official receiver may not undertake all the practical work associated with the liquidation process by himself, and he may distribute some of it amongst staff members.
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