The role of the liquidator and the receiver.
If you’re contemplating divorce or currently going through a divorce, you might be worried about how your assets will be divided. Will the division be fair? Who gets the house? Who decides who gets to keep what? Well, the short answer is: if you can’t reach an agreement, the court decides. The court appoints liquidators and receivers and in this article we’ll briefly look at what their powers are and how they help keep things fair.
When is a liquidator or a receiver appointed?
Typically, the court appoints a liquidator or a receiver where couples cannot agree on how their property should be divided, or where the division is complicated. For instance, where couples are married in community of property – meaning they jointly own all the assets and liabilities.
These professionals may also be necessary in cases of marriages out of community of property with accrual. Sometimes, the court appoints a liquidator to calculate the accrual (the increase in value of each spouse’s estate during the marriage) and ensure it is divided fairly.
Who can be appointed as a liquidator or a receiver?
The liquidator or receiver is usually an independent professional, such as an attorney, accountant, or actuary, with experience in managing and distributing assets. The court typically appoints this person if the parties cannot agree on a candidate themselves.
Impartiality is very important. To avoid any conflicts of interest, the person appointed should have no prior connection to either of the parties.
What do they do?
Their primary duty is to ensure that assets are distributed fairly and in accordance with the relevant legal frameworks. And, while their roles overlap, they have distinct responsibilities.
A liquidator is responsible for winding up the couple’s joint estate. They must identify, value, and, if necessary, sell the assets of the joint estate to distribute the proceeds fairly.
A receiver on the other hand must manage and protect the assets during the divorce process. They ensure that the assets are preserved, managed, and ultimately distributed in line with the court’s or settlement agreement’s directives.
Roles and responsibilities of a liquidator
A liquidator’s duties are comprehensive and can significantly impact the division process. Their responsibilities include:
Identifying all assets within the joint estate.
Arranging for the assets to be valued, determining their market value.
Overseeing the sale of assets, if necessary. This could involve auctioning off assets or managing private sales. The goal is to maximize returns, ensuring both parties benefit from a fair division of proceeds.
Distributing the proceeds according to the terms of the divorce settlement or court order. This process is highly regulated to ensure transparency and fairness.
Calculating the accrual in both parties’ estates, in the case of marriages covered by the accrual system, and ensures the accrual is divided according to the court’s ruling.
Compiling a final report detailing the value of the assets, the division method, and any decisions taken during the process. This report can be contested if a party believes the liquidator has acted improperly.
Roles and responsibilities of a receiver
The receiver’s role complements that of the liquidator, though it focuses on managing and preserving the value of the assets before they are divided. Key duties of the receiver include:
Taking legal possession of the assets, ensuring that they are preserved during the divorce proceedings.
Management of high-value assets like properties or businesses. This ensures the assets maintain or even increase their value before they are divided or sold.
Insuring the assets, securing physical properties, or ensuring regular maintenance to safeguard their value.
Prepares the assets for their final division or sale.
Powers of the liquidator and receiver
The court grants both liquidators and receivers substantial powers to carry out their duties effectively. Both professionals are usually empowered to take control of the joint assets and manage them during the divorce proceedings. This includes deciding which assets should be sold or retained. They can manage finances, pay off debts, and distribute remaining funds.
The liquidator or receiver has the authority to subpoena documents, demand access to financial records, and even approach the court for further directions if needed.
Who bears the costs?
The parties usually share the costs of appointing a liquidator or receiver, as well as the related expenses (such as legal fees, valuation costs, and transfer duties). These costs may be deducted from the proceeds of the joint estate before the remaining assets are divided. Alternatively, the court may direct how these costs must be apportioned between the parties.
Need help?
If you’re contemplating divorce and you need to talk to someone about the process, our family law team are experienced attorneys and compassionate listeners. They can help you plan your strategy or prepare for the road ahead.
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