Interrogations during a liquidation
An interrogation is a process that a liquidator of a liquidated company or the curator of a sequestrated person can follow to find out what happened to assets of the company or the person. Most of the time the interrogation will be requested by a creditor.
The liquidator will give notice to all relevant parties to appear at the Master’s offices on a certain date and the liquidator can subpoena anybody he wants present at the interrogation.
Reasons for interrogations
There are different reasons for holding interrogations during a liquidation process. If a disgruntled creditor feels that there are assets that are hidden or that were sold/given away 6 months (up to two years) before liquidation or sequestration, the creditor can request an interrogation. A further reason could be that the liquidator or curator might feel that the insolvent company or person did not declare all assets in the insolvency process and that there are assets that are hidden. It could also be that there was money in the bank account of the insolvent company or the insolvent person during the preceding six months that should have been paid to creditors, but these monies were instead appropriated by the directors of the company (or other private persons) or to the insolvent person. The liquidator or the creditor will then hold an interrogation so that it can be determined where the money or the assets went.
If during the interrogation it was found that the monies should have been paid to creditors or the assets should not have been sold to a third party, then during the interrogation the liquidator will try and locate where the money/assets went and who can be hold responsible to pay the shortfalls back into the insolvent estate.
Cost of interrogation
There are costs involved in holding interrogations. If a creditor demands an interrogation, he will have to carry the cost of the interrogation and it can get quite expensive. If there are sufficient monies in the insolvent estate of the company or the sequestrated person, the liquidator will be able to deduct the costs for the interrogations for these monies if he (the liquidator) needs to hold an interrogation.
The banks like to hold interrogations as they have sufficient funds and like to dig for monies or assets in insolvent estates.
How to avoid an interrogation
The best way to avoid an interrogation after insolvency is to stay within the insolvency rules and the Companies Act.