Locations
When a court appointed liquidator has carried out all of his duties and responsibilities in respect of a company and all assets are realised, the liquidator is required to apply to the High Court for final orders. The orders generally include: orders for final payments from realised assets; an order discharging the liquidator; an order dissolving the company; an order setting the period for which the liquidator must retain the company’s books and records; and an order in relation to the final accounts of the liquidator. Usually, the final orders will make provision for any outstanding costs and fees in the liquidation and the distribution of the balance of the assets amongst the creditors of the company.
Fees and costs
The application for final orders is issued by way of notice of motion and supported by an affidavit sworn by the liquidator. The affidavit will exhibit a final report prepared by the liquidator which summarises all of the work carried out in the liquidation. The report must include a detailed statement of estimated outcome in respect of all realised monies. If the liquidator is seeking measurement of his fees and expenses and liberty for their payment out of the assets of the liquidation, a summary of the work carried out by him should be included in the report. The summary should comprise a breakdown of the number of hours worked on the liquidation by the liquidator and each member of staff and details of their hourly rates. This will assist to satisfy the court that the fees are in line with those provided for in previous judgments setting out what the court has determined to be appropriate. If legal costs are being sought by the liquidator, it is recommended that an opinion from a legal costs accountant as to the appropriate legal fees is exhibited with the papers. This can negate the requirement to have the legal costs taxed by the taxing master.
Any previous interim fee orders should be referred to in the papers when applying to court to measure the fees and costs of the liquidator in the final application. If there is a dearth of assets in the liquidation and it is being funded by a creditor, the liquidator is still obliged to have his fees and expenses measured by the court.
Creditors
Where there are sufficient funds remaining after the payment of the liquidator’s remuneration, costs and expenses, the liquidator will be directed to distribute the balance amongst the creditors of the company in the normal order of priority set out in the Rules of the Superior Courts. A certificate of the examiner setting out those creditors who have proved their claims in the liquidation should be exhibited with the papers so that every creditor who will be entitled to a dividend in the liquidation does not need to be listed in the papers. Although it rarely occurs where there is a surplus remaining after the payments to preferential and unsecured creditors the court will direct that it be distributed amongst the shareholders of the company.
Notice parties
The largest materially affected creditor is required to be put on notice of the application for final orders. This is usually the Revenue Commissioners, the petitioning creditor or a lending institution. The liquidator will also be required to address any outstanding litigation the company is engaged with and any parties to such litigation should also be made notice parties to the application for final orders.
Hidden costs
The application for final orders is usually finalised many months before the work required to dissolve a company is complete, therefore it is important to be conscious of hidden costs. Provision should be made in the papers for the likely professional fees for finalising the application papers with the examiner’s office, dealing with queries from notice parties, attendance in court on the return date and dealing with dividend payments to creditors and their inevitable queries. This activity also attracts outlay such as commissioners’ fees, stamping fees, storage fees for the retention of the books and records for the company, filing fees in the CRO, and postage fees. The liquidator should also take into account the legal fees which the Revenue Commissioners will seek for their appearance in Court at the application for final orders. These anticipated costs should be included in the statement of estimated outcome contained in the final report.
Procedure
When the motion papers are drafted they are lodged in the Examiner’s Office for approval. Depending on the time of the year, this process can take a few weeks as there are often numerous amendments required. When the Examiner is satisfied that the paperwork is in order, a date will be assigned for the hearing of the application, following which the motion will then be finalised and issued. The papers should be served on the notice parties at least four clear days before the hearing of the application and a booklet of papers should be lodged in the Examiner’s Office the previous Wednesday.
However, it is a good practise to consider serving drafts of the application papers on any materially affected notice parties (such as the Revenue Commissioners or lending institutions with floating charges) which have a vested interest in the outcome of the liquidation before final versions are filed in the Examiner’s office. This can help deal with any third party queries well in advance of the court date and avoid any unnecessary amendments of filed documents and/or adjournments of court dates.
Insurance Bond
If a liquidator’s bond has been entered into, the final orders will provide for the vacation of the bond. The bond will be vacated upon the production of the final Examiner’s Certificate to the proper officer in the Central Office of the High Court.
Conclusion of the liquidation, discharge of the liquidator and the dissolution of a company
A court liquidator is discharged only after all payments have been made which are required pursuant to the final orders and after the examiner has filed a certificate of due disposal of the assets of the company. The final order and the certificate of due disposal must be filed in the Companies Registration Office. Following the filing of the certificate in the CRO, the company will be formally dissolved.
Mark Woodcock and Frances Flynn.
Mark Woodcock is a partner in the Litigation and Insolvency Unit at McDowell Purcell Solicitors.
Frances Flynn is a solicitor in the Litigation and Insolvency Unit at McDowell Purcell Solicitors.