Preparation of Liquidator’s Final Statement of Account

Liquidator’s Final Statement of Account is a statement prepared by the liquidator at the end of the liquidation process to show how the realised assets of the company have been received and disbursed. It provides a complete summary of the liquidation proceedings, including receipts from asset realisation and payments made to various claimants in the prescribed order. This statement is submitted to the Tribunal or Registrar of Companies before the dissolution of the company and serves as evidence of proper conduct of liquidation.

Meaning of Liquidator’s Final Statement of Account

The Liquidator’s Final Statement of Account is a summary account showing:

• Amounts received from realisation of assets

• Amounts paid towards liquidation expenses, creditors, and shareholders

• The final balance, if any

It is not a profit and loss account but a cash-based statement, reflecting only actual receipts and payments during liquidation.

Purpose of Preparing the Final Statement

The main purposes are:

• To provide transparency in liquidation proceedings
• To ensure statutory compliance
• To show fair distribution of assets
• To enable approval and dissolution of the company

Format of Liquidator’s Final Statement of Account

The statement is generally prepared in account form with two sides:

• Receipts (Debit side)

• Payments (Credit side)

It is also known as the Liquidator’s Cash Account.

Receipts Side (Debit Side)

The following items are recorded on the receipts side:

• Balance in Hand / Bank (if any)
  Cash or bank balance at the commencement of liquidation.

• Realisation of Assets
  Amount realised from sale of fixed assets, investments, stock, book debts, etc.

• Calls in Arrears / Unpaid Calls Received
  Amount collected from shareholders on unpaid capital.

• Contribution from Directors (if any)
  Amount recovered due to misfeasance or breach of duty.

Payments Side (Credit Side)

Payments are recorded strictly in the statutory order of priority:

• Liquidation Expenses
  Liquidator’s remuneration, legal fees, valuation charges, and other expenses.

• Overriding Preferential Payments
  Workmen’s dues and secured creditors’ dues (where applicable).

• Preferential Payments
  Employees’ wages, provident fund, gratuity, and certain government dues.

• Secured Creditors (Balance, if any)
  Where security realisation is insufficient.

• Unsecured Creditors
  Paid pari passu if assets are insufficient.

• Interest on Unsecured Debts
  Paid only if surplus is available.

• Preference Shareholders
  Return of capital and arrears of dividend.

• Equity Shareholders
  Return of capital and surplus distribution.

Steps in Preparation of Liquidator’s Final Statement

• Ascertain total assets realised

• Calculate liquidator’s remuneration

• Identify overriding preferential and preferential claims

• Determine amounts payable to secured and unsecured creditors

• Allocate surplus, if any, to shareholders

• Prepare final statement showing receipts and payments

Specimen Format of Liquidator’s Final Statement of Account

Liquidator’s Final Statement of Account

Note:

• The statement is prepared on cash basis

• Payments are made strictly as per statutory order of priority

Numerical Illustration

ABC Ltd. went into liquidation. The following information is available:

• Assets realised:

  • Fixed assets – ₹3,50,000

  • Investments – ₹1,00,000

  • Stock – ₹90,000

  • Book debts – ₹60,000

• Liquidation expenses – ₹40,000

• Liquidator’s remuneration – 5% on assets realised

• Overriding preferential payments – ₹1,00,000

• Preferential creditors – ₹70,000

• Unsecured creditors – ₹2,00,000

• Preference share capital – ₹1,00,000

• Equity share capital – ₹1,50,000

Step 1: Total Assets Realised

Fixed assets ₹3,50,000
Investments ₹1,00,000
Stock ₹90,000
Book debts ₹60,000

Total assets realised = ₹6,00,000

Step 2: Liquidator’s Remuneration

5% of ₹6,00,000 = ₹30,000

Step 3: Prepare Liquidator’s Final Statement of Account

Liquidator’s Final Statement of Account

Step 4: Interpretation

• All liquidation expenses and statutory claims are paid first

• Unsecured creditors are paid in full

• Preference shareholders receive full capital

• Equity shareholders receive the residual balance of ₹60,000