Which statement about a liquidator's role is true?

Which statement about a liquidator's role is true?

• A. They can appoint themselves as the company's CEO during liquidation.
• B. They may seek to recover undervalue transactions and reverse related sales.
• C. They can negotiate tax credits for the company.
• D. They can establish a new board of directors during liquidation.

Answer: (B)

The main concept here is that a liquidator has powers to recover value for creditors by undoing certain pre-liquidation deals. Specifically, a liquidator may challenge and unwind transactions that took assets out of the company for too little value. By recovering assets or reversing related sales, the estate can be restored with funds that can be distributed to creditors. This is a key tool in liquidation, ensuring that value isn’t lost through transfers at undervalue or improper related-party transactions. The other ideas don’t align with the liquidator’s role. A liquidator does not appoint themselves as the company’s CEO and does not run the business in the sense of corporate leadership during liquidation; control rests with the official administrator. They do not establish a new board of directors during the winding-up process. And while they handle the company’s tax affairs in the process, negotiating tax credits for the company isn’t a defining power of liquidation.

The main concept here is that a liquidator has powers to recover value for creditors by undoing certain pre-liquidation deals. Specifically, a liquidator may challenge and unwind transactions that took assets out of the company for too little value. By recovering assets or reversing related sales, the estate can be restored with funds that can be distributed to creditors. This is a key tool in liquidation, ensuring that value isn’t lost through transfers at undervalue or improper related-party transactions.

The other ideas don’t align with the liquidator’s role. A liquidator does not appoint themselves as the company’s CEO and does not run the business in the sense of corporate leadership during liquidation; control rests with the official administrator. They do not establish a new board of directors during the winding-up process. And while they handle the company’s tax affairs in the process, negotiating tax credits for the company isn’t a defining power of liquidation.