Realisation of the liquidation estate and satisfaction of creditors’ claims

A liquidator takes steps to realise the liquidation estate and to satisfy the creditors in sequence.

A liquidator is obliged to take steps to realise the liquidation estate (i.e. a legal entity’s assets). If the liquidator fails to realise the entire liquidation estate, as a matter of priority the incomplete proceeds are used to settle the costs and claims of the first and then the second category (claims that cannot be settled fully within a particular category are satisfied on a pro rata basis). The liquidator then offers to let creditors holding claims ranked in the third category take over the remaining liquidation estate in order to satisfy their debts.

The first category comprises the costs of liquidation (especially the liquidator’s fee and, where appropriate, the costs of publishing notices, and the costs of preparing the legal entity’s opening balance sheet and conducting an inventory of its assets and liabilities). The second category consists of employees’ claims. The third category is made up of other creditors’ claims. However, there are creditors classified as secured creditors under another law who are entitled to enforce their security whatever the circumstances.

If the liquidator fails to realise the liquidation estate at all within a reasonable time, or if the claims of the first and second creditor categories are not fully settled from the incomplete proceeds, the liquidator offers to let all creditors take over the liquidation estate.

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