Liquidation I The winding up or liquidation of a company refers to the realisation of its assets and the distribution of the proceeds to the persons entitled. In the case of an insolvent liquidation, the persons entitled will usually be the general body of creditors. In the case of a solvent liquidation, the persons entitled after the payment of external creditors, loan capital […]
Members Voluntary Winding Up I A company may be wound up voluntarily by way of a members’ voluntary winding up. The procedure is commenced in accordance with the Summary Approval Procedure. The Summary Approval Procedure may also be used in relation to a company whose duration is for a fixed period or until a fixed event occurs. In this case, […]
Criteria for Winding up I The petition is vouched by affidavit and is based on certain grounds set out in the legislation. A court may order a company to be wound up: if the company has by special resolution resolved that it be wound up by the court; it does not commence business within a year of its incorporation or […]
Appointment of Liquidator I In a court liquidation, the court appoints the liquidator. In practice, the petitioner’s nominee will usually be appointed. The court will not appoint a person or may replace a liquidator, who is insufficiently independent or otherwise has a conflict of interests. A liquidator appointed in a voluntary liquidation may be replaced by the court. The court […]
Financing and Remuneration The liquidator’s remuneration and expenses are payable in priority to the creditors. In the case of a creditors’ voluntary liquidation, the committee of inspection or the creditors themselves agree the remuneration. It is agreed by the members in a members’ voluntary winding up. The legislation provides for approval of the entitlement to remuneration followed by vouching the amounts […]
Moratorium on Legal Proceedings I In the case of a court-ordered liquidation, the liquidation is deemed to commence on the date on which the petition is presented, rather than the date on which the winding–up order is made. Presentation of the petition is the initiation of the proceedings in the High Court Central Office. This is the case, irrespective of […]
Cessation of Directors’ Powers On the commencement of winding up of a company, it shall cease to carry out its business except insofar as may be required for its beneficial winding up. The corporate state and powers continue until the company is dissolved. On the appointment of a liquidator, other than a provisional liquidator, all the powers of the directors cease. In […]
Directors’ Powers and Business On the commencement of liquidation, the company must cease to carry out business, except in so far as required for the beneficial winding up. The corporate state and powers continue until the company is dissolved. On the appointment of a liquidator, other than a provisional liquidator, all the powers of the directors cease. In the […]
Annual Meeting If a members’ voluntary liquidation has continued for more than twelve months, then on the first anniversary, and each subsequent anniversary, the liquidator must convene a members’ meeting. He must summon, giving seven days’ notice, the holding of a general meeting for a day falling not later than 28 days after the anniversary. He must lay before the […]
Unlawful Preference I The bankruptcy rules on “asset swelling” apply to a company liquidation. These rules deem certain pre-liquidation transfers to be invalid. The liquidator may challenge certain transfers and unwind them, in much the same way as the Official Assignee may do in a personal bankruptcy. This has the effect of swelling or increasing the assets available for the […]
Third Party Interests Assets which are held in trust or in which other persons have an interest are taken by liquidator/ assignee, subject to those interests. They take no better title that that which the insolvent individual/ company held in them. The beneficiaries under the trust can assert their ownership against the individual/ company. Trusts are subject to the laws which prohibit the transfer […]
Surplus and Shortfall If there is a surplus on winding up after payment of creditors, which should be the case in a members’ voluntary winding up, it is divided amongst the shareholders in accordance with their respective rights. Where there is a single class of ordinary shareholders, it will be shared relatively amongst them. Apart from this, the nature of […]
Termination of Liquidation In a voluntary liquidation, the liquidator must convene final meetings of the shareholders and creditors. The meetings must be advertised. The liquidator presents the accounts of the liquidation and responds to questions. A return is made to CRO certifying that the meetings were held and filing the liquidator’s account. Dissolution occurs three months after filing in the […]
EU Insolvency Recognition I The EU Insolvency Regulation determines the proper state, in which to take insolvency proceedings. The primary jurisdiction is that of the company’s “centre of main interests. It also provides for secondary insolvency proceedings in limited cases.The Regulation provides for the automatic recognition of a liquidation throughout the European Union, which is undertaken in accordance with the law […]
Failure to Keep Accounts I If a company that is being wound up is unable to pay all of its debts and has contravened the obligations regarding the keeping of accounts, then if the court considers that the contravention contributed to the inability to pay the debts; resulted in substantial uncertainty as to the assets and liabilities of the company; […]
Application to Restrict The liquidator of an insolvent company is obliged to apply to restrict the directors of the company unless relieved of the obligation to do so. The obligation applies in respect of directors and shadow directors of the company in the period of 12 months before winding up. This ODCE may relieve the liquidator of the obligation to make […]