A liquidation committee oversees an orderly winding up of a company’s assets and affairs upon dissolution or bankruptcy.
Key Responsibilities:
- Taking control of company records, property and outstanding debts.
- Verifying and settling creditor claims in accordance to priority level in a transparent manner.
- Converting assets into cash via auctions, sales or contractual assignments.
- Distributing proceeds to creditors as per their legal entitlements after expenses.
Example:
A committee of three insolvency experts managed the liquidation process of a telecom equipment maker, recovering 30% value for unsecured creditors.
Significance:
Proper functioning of liquidation committees promotes fair payouts and organized closure of distressed businesses as per the law.