Association of Chartered Certified Accountants (ACCA) Certification Practice Test

In a creditors voluntary winding up, who has the ultimate right to appoint the liquidator?

1. The shareholders

2. The creditors

3. The company's board

4. The official receiver

The correct answer is: The creditors

In a creditors' voluntary winding up, the ultimate right to appoint the liquidator lies with the creditors. This process begins when the company is unable to pay its debts, and the shareholders may initiate the winding up by passing a resolution. However, it is the creditors who have the final say in appointing the liquidator during the creditors' meeting. The creditors assess the situation, decide the best course of action, and are empowered to appoint a liquidator of their choice who will manage the liquidation process, ensuring that the company's assets are distributed fairly among them. This structure emphasizes the interests of creditors since they have a financial stake in the outcome of the liquidation. While shareholders and the company’s board may influence the process initially, their role is limited, and they do not have ultimate authority in appointing the liquidator in this context. The official receiver does play a role in overseeing the process, particularly if the case involves court proceedings, but it is the creditors who retain the decisive power in appointing the liquidator during a creditors' voluntary winding up.