Introduction
In my previous articles I have written that liquidation, in the case of a company, is the process of winding up that business. In this article I deal with the liquidator’s report as required by section 46 of the Insolvency Act (Chapter 6:07) or “the Act”.
Contents of a liquidator’s report
Section 46 of the Insolvency Act covers what should be included in the liquidator’s report once he or she is appointed.
Investigating and reporting
According to section 46(1) of the Act the liquidator must investigate the affairs of the (insolvent) debtor and the business transactions entered into by the debtor before the liquidation. The liquidator must at the first meeting of creditors of the insolvent estate or, if that is not possible, at a special meeting of creditors, submit a full written report on those affairs and transactions and on any matter of importance relating to the debtor or the insolvent estate.
Specific contents of the liquidator’s report
According to section 46(2) the liquidator’s report must contain the following:
- The assets and liabilities of the insolvent estate.
- Whether there is a risk of a contribution by creditors in terms of section 104 of this Act, or indicate why the liquidator is unable to express an opinion on the matter.
- The cause of the debtor’s insolvency.
- In the case of a debtor which is a company, whether or not the debtor has kept the accounting records required by sections 173 and 259 of the Companies Act [Chapter 24:31]
- Whether the debtor appears to have contravened any provision of the Insolvency Act or to have committed any other offence such as whether the debtor has failed to send a statement of affairs and whether the debtor has contravened the provisions of Income tax Act [Chapter 23:06].
- Where applicable, the monthly income and expenses of the insolvent.
- Any business carried on by or on behalf of the insolvent estate and the result thereof.
- any legal proceedings instituted by or against the debtor which were suspended by the liquidation of the estate and any other legal proceedings that are pending or may be instituted against the insolvent estate.
- Any transaction entered into by the debtor before the liquidation of his or her estate in respect of the acquisition of immovable property which was not transferred to him or her, or any transaction entered into by the debtor as lessee.
- The names of secured creditors with the amounts of the secured claims and steps taken or envisaged to investigate the validity of the security.
- Any other matter relating to the administration or the realisation of the assets of the insolvent estate requiring the direction of the creditors.
- In the case of a debtor which is a company, whether there are or appear to be any grounds for an order by the Court under the Companies Act [Chapter 24:31], to declare a person delinquent.
- In the case of a debtor other than a natural person or partnership, whether or not any trustee, director, officer or member or former trustee, director, officer or member appears to be personally liable for damages or compensation to the debtor or for any debts or liabilities of the debtor as provided for in this or any other Act.
- Whether or not further enquiry is desirable in regard to any matter relating to the promotion, formation or failure of the debtor or the conduct of its business.
Report on options other than liquidation
According to section 46(3) of the Insolvency Act, if the liquidator’s report is submitted before the granting of the final Court order, the liquidator must report whether any of the following, where applicable, are more appropriate than liquidation:
- corporate rescue proceedings in terms of this Act.
- scheme of arrangement in terms of the Companies and Other Business Entities Act [Chapter 24:31].
- compromise in terms of section 148 of this Act.
- pre- or post-liquidation composition in terms of section 119 or 120 of this Act.
Liquidator to report on offences
According to section 46(4) of the Insolvency Act, the liquidator must supply the Zimbabwe Commissioner of Police with an affidavit containing a report relating to any offence that the debtor committed and must send a copy of the report by standard notice to the Master and on request of the Commissioner supply further particulars.
Conclusion
The above explains what the liquidator’s report must contain.
Disclaimer
This simplified article is for general information purposes only and does not constitute the writer’s professional advice.
Godknows (GK) Hofisi, LLB(UNISA), B.Acc(UZ), Hons B.Compt (UNISA), CA(Z), MBA(EBS, Heriot- Watt, UK) is the Managing Partner of Hofisi & Partners Commercial Attorneys, chartered accountant, insolvency practitioner, registered tax accountant and advises on deals and transactions. He has extensive experience from industry and commerce and is a former World Bank staffer in the Resource Management Unit. He writes in his personal capacity. He can be contacted on +263 772 246 900 or ghofisi@hofisilaw.com or gohofisi@gmail.com. Visit www//:hofisilaw.com for more articles.
