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What’s the difference between a liquidator and the Official Receiver?

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At first glance it may appear that a liquidator and the Official Receiver (OR) fulfil the same roles. In reality, however, there are differences centred around the circumstances in which they’re appointed.

The Official Receiver is typically in charge of the liquidation process when a creditor forces a debtor company into liquidation. This is initiated via a winding up petition, which is then heard at court.

When an insolvent company takes the initiative and enters liquidation voluntarily, the directors can appoint their own choice of private liquidator. This must be a licensed insolvency practitioner (IP), as Creditors’ Voluntary Liquidation (CVL) is an official insolvency process.

Who is the Official Receiver?

The Official Receiver is a civil servant and officer of the court, and works on behalf of the Insolvency Service. The OR can realise company assets in the same way as a private liquidator, and conduct a full liquidation process, but sometimes they pass on a case to an independent licensed IP.

Who are liquidators in company insolvency?

Independent liquidators are licensed and regulated individuals appointed by either an insolvent company’s directors, or the Official Receiver after the initial stages of a compulsory liquidation are complete.

A liquidator may work alone or as part of a firm of licensed IPs, and they typically have a background in accountancy and/or law. So what are the main differences between a liquidator and the Official Receiver?

Differences between liquidators and the Official Receiver

When appointed and length of appointment

Official Receiver

As an officer of the court, an Official Receiver is notified when a company enters compulsory liquidation. They administer the initial stages of the liquidation process, and may or may not continue to conduct the case to its conclusion.

Liquidator

An independent liquidator may be appointed by the company directors, following nomination by the shareholders. Company creditors have the right to vote on whether to accept this appointment, however, or choose their own liquidator.

Who they’re employed/hired by

Official Receiver

The Official Receiver works on behalf of the Insolvency Service and is accountable to the Secretary of State for Business, Innovation, and Skills. As an officer of the court, the OR is also answerable to the court.

Liquidator

A privately appointed liquidator may have been hired by the company directors, but in the case of insolvent liquidation they work in the interests of creditors. They aren’t answerable to the directors of the company who have appointed them in this instance, but have a legal obligation to provide the best financial return for those owed money by the business.

Why is it better to enter CVL than wait for enforced liquidation?

If your company is experiencing serious financial difficulty, it’s far better to enter Creditors’ Voluntary Liquidation than wait for compulsory liquidation by a creditor. The Official Receiver has strong investigative powers, and by waiting for a winding up petition you may inadvertently worsen creditor financial losses.

If director misconduct is found to have taken place, you could face disqualification or even personal liability for some of the company’s debt. By voluntarily placing your company into liquidation you have the right to choose your own liquidator, and crucially, can protect your creditors’ interests.

You may also be able to claim redundancy pay as the director of a company in voluntary insolvent liquidation, which could be used to cover the professional fees involved.

UK Liquidators are liquidation specialists and can provide more information on the roles of liquidator and the Official Receiver. Please get in touch to find out more. We operate a broad network of offices across the UK, and can arrange a free, same-day consultation with one of our partner-led team.

Jonathan Munnery
Partner

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