Misconduct
Where, during the investigation of the affairs of the company, the liquidator uncovers wrongdoing on the part of the management of the company, he may have power to bring proceedings for wrongful trading or, in extreme cases, for fraudulent trading.
However, the liquidator cannot normally enter into a champertous agreement to assign the fruits of an action to a third party offering to finance the litigation, if the right to said action accrued solely as a result of the liquidator's statutory duties, instead of being a right to action that had existed before the liquidator came on the scene.
The liquidator may also seek to set aside transactions which were entered into by the company in the time immediately preceding the company going into liquidation where he forms the view that they constitute an unfair preference or a transaction at an undervalue.
Read more about this topic: Liquidator (law)