Meaning
Fiduciary obligations during company wind up require the management of assets and the settlement of debts by a designated group of officers. The liquidation committee statutory duty begins the moment the shareholders or a court decide to dissolve the legal entity. This body replaces the board of directors and takes full control of the corporate seals and bank accounts.
It is responsible for ensuring that all creditors are treated according to the priority set by law.
Asset Management
Members of the committee must perform a full inventory of the property and equipment owned by the firm. The liquidation committee statutory duty includes the protection of these assets from unauthorized removal by shareholders or employees. Any sale of assets must be conducted at a fair market price to maximize the recovery for creditors.
Creditor Notification
Formal announcements in a designated newspaper must be made to invite all claimants to register their debts. The liquidation committee statutory duty requires the committee to verify each claim against the books and records of the company. Disputes over the validity of a debt are settled by the committee or referred to a court.
Indemnity Liability
Failure to follow the legal sequence of payments can result in personal financial responsibility for the committee members. The liquidation committee statutory duty remains in effect until the final tax clearance and account closure are complete. Negligence during this process allows creditors to sue the individual members for their losses.
