Controlling the Liquidator - The Creditors committee

Liquidation Committees and Creditors Resolutions in a Liquidation

A liquidator has specific powers which are set out at Schedule 4 of the Insolvency Act 1986.

The creditors can however, to a degree, monitor the activities of a liquidator by establishing a liquidation committee.

Liquidation Committee

At the first meeting of creditors, creditors have a right to appoint a liquidation committee. This committee must have at least 3 members, but a maximum of 5 is permitted.

A liquidator requires the sanction of the committee to exercise the following powers:-

  • to pay any class of creditor in full
  • to enter into any compromise or arrangement with creditors
  • to enter into compromise of any debts due to the company
  • to take security for the discharge of a debt

The committee is also responsible for reviewing the liquidators insolvency (insurance) bond and fixing the basis of the liquidators remuneration.

The committee assists the liquidator in deciding how to deal with key issues that arise in the liquidation.

When a committee is established the liquidator has a duty to report on matters that appear to him and those that the committee has indicated as being of concern. All members f the committee should be informed of significant developments and their approval obtained on material transactions such as:

  • litigation
  • sale of material assets
  • dividend payments to creditors


The Liquidators remuneration is fixed by the liquidation committee or by the general body of creditors by way of a resolution passed at the first meeting of creditors.

Liquidators Fees must be fixed either

  • by reference to time spent by the liquidator and his staff or
  • as a percentage of the realisations or distributions

A liquidator can request that the creditors increase the fees, should the committee fix the fees too low and may appeal to the court for a decision on what the committee or creditors have resolved.

Once remuneration is fixed, the liquidator can draw fees up to the amount agreed. If this proves too low, the committee or creditors can be asked to increase them.

Annual Meetings / Reports

Whether or not a committee is established, on the anniversary of the liquidation, the liquidator must send an annual report to all creditors, to set out the progress made in the liquidation and to provide a copy of his receipts and payments account.

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