Which statement about a liquidator's powers is true?

Which statement about a liquidator's powers is true?

• A. They can appoint directors to run the company after liquidation.
• B. They are never allowed to pursue undervalue transactions.
• C. They can investigate intra-group transfers of assets sold at undervalue.
• D. They can reconstitute the company as a new entity after liquidation.

Answer: (C)

A liquidator’s powers are focused on preserving and realising the insolvent company’s assets for its creditors, including challenging transactions that harm creditors by transferring value away from the company. Under the Insolvency Act 1986, they can set aside transactions at undervalue, which means they can reverse or claw back deals where assets were disposed of for little or no consideration just before liquidation. This power extends to intra-group transfers, such as assets being sold within the group at a price far below market value, because such moves can undermine creditors’ chances of recovery. By investigating these transfers, the liquidator can seek to recover value for the estate and ensure a fairer distribution among creditors. The other ideas don’t fit because the liquidator does not take on running the company after liquidation; the company is wound up and ultimately dissolved, not reconstituted or continued under new management by the liquidator.

A liquidator’s powers are focused on preserving and realising the insolvent company’s assets for its creditors, including challenging transactions that harm creditors by transferring value away from the company. Under the Insolvency Act 1986, they can set aside transactions at undervalue, which means they can reverse or claw back deals where assets were disposed of for little or no consideration just before liquidation. This power extends to intra-group transfers, such as assets being sold within the group at a price far below market value, because such moves can undermine creditors’ chances of recovery. By investigating these transfers, the liquidator can seek to recover value for the estate and ensure a fairer distribution among creditors.

The other ideas don’t fit because the liquidator does not take on running the company after liquidation; the company is wound up and ultimately dissolved, not reconstituted or continued under new management by the liquidator.