The Supreme Court recently ruled that the advice provided by the Stakeholders Consultation Committee (SCC) during liquidation proceedings is not mandatory for Liquidators to follow.
In this case, the appellant argued that the Liquidator initiated the process without forming an SCC, which they claimed was a violation. However, the respondent countered, pointing out that the requirement to form an SCC was introduced through a regulation update in July 2019, after the liquidation process in question had already begun.
The Court clarified that under Regulation 31A, a Liquidator must establish an SCC within 60 days of starting liquidation. This committee is meant to offer guidance on professional appointments, remuneration, and asset sales. However, the Court emphasized that this advice remains non-binding. If the Liquidator chooses to act contrary to the SCC’s recommendations, reasons must be documented and shared in the subsequent progress report.
In this specific case, as the liquidation commenced before the new regulation was enforced, the Supreme Court concluded that the appellant’s claim was unfounded, reinforcing that the Liquidator’s actions were in line with the law.