Skip to content

ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Zeta Ltd has gone into compulsory liquidation and a liquidator has been appointed. In general terms, what is the liquidator's main function once appointed?

The liquidator collects and realises the company's assets and distributes the proceeds to creditors, and then to members, in the statutory order of priority. The aim is to wind the company up, not to run it indefinitely or to favour shareholders ahead of creditors.

  1. ATo continue running the company's business indefinitely for the benefit of the directors
  2. BTo collect in and realise the company's assets and distribute the proceeds to creditors and then members in the order required by lawCorrect
  3. CTo decide which shareholders should receive the highest dividends before creditors are considered

Explanation

A liquidator's core role is to take control of the company's assets, realise them and distribute the proceeds according to the statutory order of priority. The business is generally wound up, not continued indefinitely. Members are paid only after creditors, so favouring shareholders first is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Insolvency and administration shows your real accuracy, how long you take and where you lose marks.

Practise Insolvency and administrationFree diagnostic mock

More Insolvency and administration questions