Liquidator

The term liquidator refers to an entity or a person that liquidates assets. Liquidation of assets means they are being sold on the free market for cash. Generally, liquidators act on behalf of the company and their actions are considered to be legal. 

When a company goes bankrupt, the liquidator (who is usually an officer) is assigned to arrange the company's affairs when it is closing. After the liquidator has sold the company's assets, the remaining funds are generally used to pay off any debts that the company has. 

Liquidators can be assigned by unsecured creditors, the shareholders of a company, or the court. Liquidators usually start working as a company goes bankrupt. Generally, the liquidator is in charge of the company’s or individual’s assets. The assets then are sold one at a time. The cash received after the company’s or individual’s assets are sold. The cash received is used to pay off the debt of the company or individual. 

One of the main aims of liquidators is bringing and defending lawsuits. Liquidators can legally act on behalf of a company, when bringing and defending lawsuits, and selling its assets. They also are responsible for paying off debts and bills, collecting money received from selling assets, and finishing termination procedures. 

Authorities and responsibilities

The laws where a liquidator’s role is assigned define their power and authority. A liquidator may either have some liberties, but be under the auspices of the court, or be granted complete authority over business, until all assets are sold.

The liquidator has a legal responsibility to the court, the company, and the creditors involved in the liquidation process. Liquidators are responsible for the company and its assets, they make sure that the assets are properly valued, and shared between the claimants. Such a person is also responsible for holding meetings with creditors and with the company that is in the process of liquidation. 

In order to get rid of their assets, retailers can go through liquidation. They usually do so because of imminent bankruptcy. The liquidator arrives at the decision on how to sell the assets. The liquidator is also the one who pays off the company’s creditors and organizes this whole process. 

Liquidators can also work with other companies. They aren't limited to only working with retailers. Other companies and businesses that face liquidation may need the assistance of a liquidator.

How liquidators make money

Usually, liquidators charge fees for their services. The price of their services depends on the complexity of the case, the amount of time needed to finish the job, and the size of the business that is being liquidated. 

As a rule, liquidators' fees are always first to be paid. Senior secured creditors, unsecured creditors, preferred shareholders, and common shareholders get paid after them.

Sometimes liquidators do not get involved in the liquidation process. As a rule, this happens when companies file for voluntary liquidation. 

Liquidation Sales

Some companies practice liquidation sales to reduce costly inventory. In these cases, a company's inventory is usually sold at the lowest price possible. Companies rarely sell all of their stock at a steep discount. However this still happens. There are two main reasons for it: either the company is insolvent or the company needs to replace its stock with a newer inventory.