Powers and duties of Insolvency Practitioners

This draft chapter deals with the duties with liquidators in voluntary and compulsory winding up, and trustees in Insolvency. It is heavily amended, with entire sections and paragraphs crossed out completely.

The Committee suggests that such duties should not be one of utmost good faith, since this would go beyond ordinary fiduciary duties. Instead, the duty should vary according to the position. The committee recommends that such a duty be a statutory one, with causes of actions available to both the debtor and creditor.

Responsibilities in the Acts: same duties, different wordings

The states that there are differences in wording between the same responsibilities laid out in different Acts. It recommends that a comprehensive and harmonised set of powers and duties of all insolvency practitioners be produced.

Extended powers for The Department for Trade

The Department of Trade has control over trustees and liquidators in compulsory winding up proceedings, but not in voluntary ones. The committee recommends that control be extended to liquidators in voluntary winding up.

Control by the Courts: an example of harmonisation

This section recommends that the way in which the law relating to courts’ control covers all classes of practitioners should be a model for harmonising duties of different classes of practitioners.

Personal liability of practitioners

This limited liability should be extended so as to make it fairer on third parties dealing with the practitioner. The committee also finds it unnecessary to sanction a liquidator’s ability to employee a solicitor to assist him/her.

Taxation

The rules on taxation vary between voluntary and compulsory liquidations. The report recommends that costs should not be taxed, unless required by the liquidator.

Duty to individual shareholders and creditors

Th committee could not support the proposition that practitioners should be able to take action in the name of shareholders and creditors. Further. the committee recommends that the power enjoyed by appointed liquidators in relation to making a distribution should be extended to include voluntary liquidators as well.

On voluntary winding up becoming compulsory

The committee recommend that a liquidator should have power to oppose, and also be heard by a court, if a voluntary winding up were to become compulsory.

Powers of a receiver

Again, the committee recommends that powers of both court-appointed and directly-appointed receivers should be the same. It also recommends that wider powers be given to receivers, including access to the courts in case of a dispute.

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