The Liquidator’s role is to collect in and/or sell the assets of the charity for the benefit of creditors and where possible the benefit of another charity where there is a surplus after the costs of the liquidation.
When a charity or not for profit organisation appoints a Liquidator, the Liquidator takes over all of the trustees’ responsibilities and duties, relieving the trustees of the pressure they have been facing.
Part of the Liquidator’s role in an insolvent liquidation is to investigate the charity’s affairs with a view to maximising its assets for the benefit of creditors. This includes reviewing the conduct of the trustees to identify any significant breaches of their duties under any relevant legislation (e.g. Charities Act or Companies Act) and seek to take action against the relevant trustees to recover funds for the benefit of creditors. More information on potential claims against trustees can be found here.
The Liquidator is required to send a report on the trustees’ conduct to the Secretary of State for Business, Innovation and Skills. The report highlights whether or not the actions of the trustees’ have been fit and proper in their role or whether their conduct has been unfit. If it is unfit there may be proceedings taken to prevent the relevant trustees acting in the management of any limited company or LLP for between 2 and 15 years.
There are other obligations under law, but a lot of these are to do with how and when the Liquidator needs to correspond with stakeholders and what he/she can and cannot do without further approval from the creditors.