Swelling Assets
Companies Act
CHAPTER 6
Realisation of assets and related matters
Custody of company’s property
596. (1) Upon the appointment of a liquidator to a company, the liquidator shall take into his or her custody or under his or her control the seal, books and records of the company, and all the property to which the company is or appears to be entitled.
(2) A person who, without lawful entitlement or authority, has—
(a) at the date of the appointment of a liquidator to a company, possession or control of the books, records or other property of the company, or
(b) subsequent to such date comes into such possession or control,
shall surrender immediately to the liquidator such books, records or other property, as the case may be.
(3) In this section “liquidator” does not include a provisional liquidator.
Circumstances in which floating charge is invalid
597. (1) Where a company is being wound up, a floating charge on the undertaking or property of the company created within 12 months before the date of commencement of the winding up shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid.
(2) Subsection (1) does not apply to—
(a) money actually advanced or paid, or the actual price or value of goods or services sold or supplied, to the company at the time of or subsequently to the creation of, and in consideration for, the charge, nor
(b) interest on that amount at the appropriate rate.
(3) For the purposes of subsection (2), the value of any goods or services sold or supplied by way of consideration for a floating charge is the amount in money which at the time they were sold or supplied could reasonably have been expected to be obtained for the goods or services in the ordinary course of business and on the same terms (apart from the consideration) as those on which they were sold or supplied to the company.
(4) Where a floating charge on the undertaking or property of a company is created in favour of a connected person, subsection (1) shall apply to such a charge as if the period of 12 months mentioned in that subsection were a period of 2 years.
Other circumstances in which floating charge is invalid
598. (1) Where—
(a) a company is being wound up,
(b) the company was, within 12 months before the date of commencement of the winding up, indebted to any officer of the company or a connected person,
(c) such indebtedness was discharged whether wholly or partly by the company or by any other person, and
(d) the company created a floating charge on any of its assets or property within 12 months before the date of commencement of the winding up in favour of the officer or connected person to whom such company was indebted,
then (without prejudice to any rights or liabilities arising apart from this section) such charge shall be invalid to the extent of the repayment referred to in paragraph (c) unless it is proved that the company immediately after the creation of the charge was solvent.
(2) In this section, “officer” includes a spouse, civil partner, child or nominee of an officer and the reference in this subsection to a child of an officer shall be deemed to include a child of the officer’s civil partner who is ordinarily resident with the officer and the civil partner.
Related company may be required to contribute to debts of company being wound up
599. (1) On the application of the liquidator or any creditor or contributory of a company that is being wound up, the court, if it is satisfied that it is just and equitable to do so, may make the following order.
(2) That order is one that any company that is or has been related to the company being wound up shall pay to the liquidator of that company an amount equivalent to the whole or part of all or any of the debts provable in that winding up.
(3) The court may specify that that order shall be subject to such terms and conditions as the court thinks fit.
(4) In deciding whether it is just and equitable to make an order under this section the court shall have regard to the following matters:
(a) the extent to which the related company took part in the management of the company being wound up;
(b) the conduct of the related company towards the creditors of the company being wound up;
(c) the effect which such order would be likely to have on the creditors of the related company concerned.
(5) No order shall be made under this section unless the court is satisfied that the circumstances that gave rise to the winding up of the company are attributable to the acts or omissions of the related company.
(6) Notwithstanding any other provision, it shall not be just and equitable to make an order under this section if the only ground for making the order is—
(a) the fact that a company is related to another company, or
(b) that creditors of the company being wound up have relied on the fact that another company is or has been related to the first-mentioned company.
(7) For the purposes of this section—
“company” includes any company, and any other body, which is liable to be wound up under this Act;
“creditor” means a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding €10,000 or 2 or more creditors, by assignment or otherwise, to whom in aggregate the company is indebted in a sum exceeding €20,000.
(8) Where an application for an order under this section seeks to require a credit institution to contribute to the debts of a related company, a copy of every such application shall be sent by the applicant to the Central Bank which shall be entitled to be heard by the court before an order is made.
Pooling of assets of related companies
600. (1) Where 2 or more related companies are being wound up and the court, on the application of the liquidator, or any creditor or contributor, of any of the companies, is satisfied that it is just and equitable to do so, it may make the following order.
(2) That order is one that, to the extent specified in the order, the companies shall be wound up together as if they were one company, and if such an order is made, it shall, subject to the provisions of this section, have effect and all the relevant provisions of this Part shall apply accordingly.
(3) The court may specify that that order shall be subject to such terms and conditions as the court thinks fit.
(4) In determining those terms and conditions, the court shall have particular regard to the interests of those persons who are members of some, but not all, of the companies.
(5) Where the court makes an order under this section—
(a) the court may remove any liquidator of any of the companies, and appoint any person to act as liquidator of any one or more of the companies,
(b) the court may give such directions as it thinks fit for the purpose of giving effect to the order,
(c) nothing in this section or the order shall affect the rights of any secured creditor of any of the companies,
(d) debts of a company that are to be paid in priority to all other debts of the company pursuant to sections 621 and 622 shall, to the extent that they are not paid out of the assets of that company, be subject to the claims of holders of debentures under any floating charge created by any of the other companies,
(e) unless the court otherwise orders, the claims of all unsecured creditors of the companies shall rank equally among themselves.
(6) In deciding whether it is just and equitable to make an order under this section, the court shall have regard to the following matters:
(a) the extent to which any of the companies took part in the management of any of the other companies;
(b) the conduct of any of the companies towards the creditors of any of the other companies;
(c) the extent to which the circumstances that gave rise to the winding up of any of the companies is attributable to the acts or omissions of any of the other companies;
(d) the extent to which the businesses of the companies have been intermingled.
(7) Notwithstanding any other provision, it shall not be just and equitable to make an order under this section if the only ground for making the order is—
(a) the fact that a company is related to another company, or
(b) that creditors of a company being wound up have relied on the fact that another company is or has been related to the first-mentioned company.
(8) Notice of an application to the court for the purposes of this section shall be served on every company specified in the application, and on such other persons as the court may direct, not later than the end of the 8th day before the day the application is heard.
(9) Without prejudice to subsection (8), where a related company, the subject of an application for an order under this section, is a credit institution, a copy of the application shall be sent by the applicant to the Central Bank which shall be entitled to be heard by the court before an order is made.
Power of liquidator to accept shares as consideration for sale of property of company
601. (1) This section applies where a company is proposed to be, or is in course of being, wound up as a members’ voluntary winding up, and the whole or part of its business or property is proposed to be transferred or sold to another company, whether a company registered under this Act, an existing company or any other type of company or undertaking (in this section referred to as the “transferee company”).
(2) Where this section applies, the liquidator of the first-mentioned company in subsection (1) (in this section referred to as the “transferor company”) may, subject to subsection (3)—
(a) in compensation or part compensation for the foregoing transfer or sale, receive shares, policies or other like interests in the transferee company for distribution among the members of the transferor company, or
(b) enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies or other like interests, or in addition to them, participate in the profits of, or receive any other benefit from, the transferee company.
(3) The powers of the liquidator under subsection (2) are not exercisable unless a special resolution of the company sanctions the exercise of those powers by the liquidator, whether generally or with regard to the particular arrangement concerned, but this subsection is without prejudice to subsections (5) and (8).
(4) Any sale or arrangement in pursuance of this section shall be binding on the members of the transferor company.
(5) If—
(a) the voting rights conferred by any shares in the transferor company were not cast in favour of the resolution concerned referred to in subsection (3) conferring the sanction there mentioned on the liquidator, and
(b) the holder of those shares expresses his or her dissent from such sanction in writing addressed to the liquidator and left at the registered office of the company within 7 days after the date of passing of the resolution,
that holder may require the liquidator either to—
(i) abstain from carrying the resolution into effect, or
(ii) purchase that part of his or her interest which those shares represent at a price to be determined by agreement, or by arbitration in accordance with subsections (9) and (10).
(6) If the liquidator elects to purchase that holder’s interest, the purchase money shall be paid before the company is dissolved and, unless otherwise provided for, shall be deemed to be, and shall be paid as part of, the costs, charges and expenses of the winding up.
(7) A resolution referred to in subsection (3) shall not be invalid for the purposes of this section by reason that it was obtained before or concurrently—
(a) with the passing of—
(i) the special resolution referred to in section 202 (1)(a)(i) — in a case where the Summary Approval Procedure is employed, or
(ii) the resolution referred to in section 580 (1) — where the procedure there mentioned is employed,
or
(b) with the passing of a resolution for appointing a liquidator or liquidators in that winding up.
(8) However a resolution referred to in subsection (3) shall not be effective to confer the sanction there mentioned if an order is made, within a year after the date of the resolution’s passing, for winding up the company by the court, unless the resolution is confirmed by the court.
(9) An arbitration referred to in subsection (5)(ii) shall be conducted by a single arbitrator appointed by agreement in writing between the holder of shares referred to in subsection (5) and the liquidator or, in the absence of such agreement, by 2 arbitrators, one of whom shall be appointed in writing by each party to the arbitration.
(10) The provisions of the Arbitration Act 2010 applicable to arbitrations referred to in section 29 of that Act shall apply to an arbitration referred to in subsection (5).
Voidance of dispositions of property, etc. after commencement of winding up
602. (1) This section applies to each of the following acts in any winding up of a company:
(a) any disposition of the property of the company;
(b) any transfer of shares in the company; or
(c) any alteration in the status of the members of the company,
made after the commencement of the winding up.
(2) Without prejudice to subsection (3), an act to which this section applies that is done without the sanction of—
(a) the liquidator of the company, or
(b) a director of the company who has, by virtue of section 677 (3) retained the power to do such act,
shall, unless the court otherwise orders, be void.
(3) Nothing in this section makes a person who does an act rendered void by this section liable for doing such act, being an act that was done by the person at the request of the company, unless it is proved that, prior to the person’s doing the act, the person had actual notice that the company was being wound up.
(4) If a company that is being wound up makes a request of a person to do an act referred to in subsection (3) and does not, at or before the time of making the request, inform the person that it is being wound up, the company and any officer of it who is in default shall be guilty of a category 2 offence.
(5) Nothing in subsection (4) shall be read as limiting any liability, civil or criminal, that, apart from this section, may attach to a company, or any officer of it, for making a request of the kind referred to in that subsection, irrespective of the consideration that the relevant facts have been communicated to the person concerned or that those facts are otherwise in the knowledge of that person.
Voidance of executions against property of company
603. Unless the court orders otherwise, where a company is being wound up, each of the following shall be void, namely, any—
(a) attachment,
(b) sequestration,
(c) distress, or
(d) execution,
put in force against the property or effects of the company after the commencement of the winding up.
Unfair preference: effect of winding up on antecedent and other transactions
604. (1) Subsection (2) applies to each of the following acts, namely, any:
(a) conveyance;
(b) mortgage; or
(c) delivery of goods, payment, execution or other act,
relating to property made or done by or against a company, which is unable to pay its debts as they become due, in favour of—
(i) any creditor of the company, or
(ii) any person on trust for any such creditor.
(2) An act to which this subsection applies, that is done with a view to giving the creditor referred to in subsection (1)(i), or any surety or guarantor for the debt due to such creditor, a preference over the other creditors of the company, shall be deemed an unfair preference of its creditors and be invalid accordingly if—
(a) a winding up of the company commences within 6 months after the date of the doing of the act, and
(b) the company is, at the time of the commencement of the winding up, unable to pay its debts (taking into account the contingent and prospective liabilities).
(3) Any conveyance or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.
(4) An act to which subsection (2) applies in favour of a connected person which was done within 2 years before the commencement of the winding up of the company shall, unless the contrary is shown, be deemed in the event of the company being wound up—
(a) to have been done with a view to giving such person a preference over the other creditors, and
(b) to be an unfair preference, and be invalid accordingly.
(5) Subsections (2) and (4) shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the company.
Liabilities and rights of persons who have been unfairly preferred
605. (1) Where—
(a) a company is being wound up, and
(b) any act done is void under section 604 as an unfair preference of a person interested in property mortgaged or charged to secure the company’s debt,
then (without prejudice to any rights or liabilities arising apart from this section) the person preferred shall be subject to the same liabilities and shall have the same rights as if he or she had undertaken to be personally liable as surety for the debt to the extent of the charge on the property or the value of his or her interest, whichever is the less.
(2) The value of the foregoing person’s interest shall be determined as at the date of the act constituting the unfair preference, and shall be determined as if the interest were free of all encumbrances other than those to which the charge for the company’s debt was then subject.
(3) On any application made to the court in relation to any payment on the ground that the payment was an unfair preference of a surety or guarantor, the court—
(a) may determine any questions relating to the payment arising between the person to whom the payment was made and the surety or guarantor and grant relief in respect thereof, and
(b) for that purpose, may give leave to bring in the surety or guarantor as a third party as in the case of an action for the recovery of the sum paid,
and jurisdiction to do any of those things may be exercised notwithstanding that it is not necessary to exercise such jurisdiction for the purposes of the winding up.
(4) Subsection (3) shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies to payments
Power of court to assess damages against certain persons
612. (1) Subsection (2) applies if in the course of winding up a company it appears that—
(a) any person who has taken part in the formation or promotion of the company, or
(b) any past or present officer, liquidator, provisional liquidator or examiner of the company, or receiver of the property of the company,
has misapplied or retained or become liable or accountable for any money or property of the company, or has been guilty of any misfeasance or other breach of duty or trust in relation to the company.
(2) The court may, on the application of the Director or the liquidator or any creditor or contributory of the company, examine into the conduct of the promoter, officer, liquidator, examiner or receiver, and compel him or her—
(a) to repay or restore the money or property or any part of it respectively with interest at such rate as the court thinks just, or
(b) to contribute such sum to the assets of the company by way of compensation in respect of the misapplication, retainer, misfeasance or other breach of duty or trust as the court thinks just.
(3) This section shall have effect notwithstanding that the person in respect of whom an order has been sought under it may be criminally liable in respect of the matters on the ground of which the order is to be made.
Directors of holding company: power of court to assess damages against them
613. (1) Subsection (2) applies if, in the course of winding up a company which is a subsidiary of another company, it appears that any director of the subsidiary’s holding company has—
(a) misapplied or retained or become liable or accountable for any money or property of the subsidiary, or
(b) been guilty of any misfeasance or other breach of duty or trust in relation to the subsidiary.
(2) The court may, on the application of the liquidator or any creditor, contributory or member of the subsidiary, examine into the conduct of the director concerned and compel him or her—
(a) to repay or restore the money or property or any part of it respectively with interest at such rate as the court thinks just, or
(b) to contribute such sum to the assets of the subsidiary by way of compensation in respect of the misapplication, retainer, misfeasance or other breach of duty or trust as the court thinks just.
(3) This section—
(a) shall have effect notwithstanding that the person in respect of whom an order has been sought under it may be criminally liable in respect of the matters on the ground of which the order is to be made, and
(b) is without prejudice to any other basis for imposing liability on any person (whether related to the company or not) in respect of the person’s acts or defaults in relation to the company or its property.
Vesting of property of company in liquidator
614. (1) Where a company is being wound up, the court may, on the application of the liquidator, by order, direct that all or any part of the property of whatsoever description belonging to the company or held by trustees on its behalf shall vest in the liquidator by his or her official name.
(2) On such an order being made—
(a) the property to which the order relates shall vest accordingly in the liquidator, and
(b) the liquidator may, after giving such indemnity, if any, as the court may direct,
bring or defend in his or her official name any action or other legal proceeding which relates to that property or which it is necessary to bring or defend for the purpose of effectually winding up the company and recovering its property.
Disclaimer of onerous property in case of company being wound up
615. (1) In this section “onerous property” means property (whether tangible or intangible) that is property of a company which is being wound up and that falls into one or more of the following categories:
(a) land of whatsoever kind burdened with onerous covenants;
(b) shares or stock in any company or undertaking;
(c) an unprofitable contract;
(d) any other property which is unsaleable or not readily saleable by reason of its binding the possessor of it to the performance of any onerous act or to the payment of any sum of money.
(2) Subject to subsections (4) and (7), the liquidator of the company concerned may, with the leave of the court and subject to the provisions of this section, by writing signed by him or her, at any time within the relevant period, disclaim onerous property; such leave may be granted by the court and the property disclaimed notwithstanding that the liquidator—
(a) has endeavoured to sell or has taken possession of the property, or
(b) has exercised any act of ownership in relation to it.
(3) In subsection (2) “relevant period” means the period of 12 months after the date of the commencement of the winding up of the company or such extended period as may be allowed by the court.
(4) Where the existence of onerous property has not come to the knowledge of the liquidator of the company concerned within one month after the date of the commencement of the winding up, the power under this section of disclaiming the property may be exercised at any time within 12 months after the date on which the liquidator has become aware thereof or such extended period as may be allowed by the court.
(5) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interests and liabilities of the company, and the property of the company, in or in respect of the property disclaimed; however it shall not, except so far as is necessary for the purpose of releasing the company and the property of the company from liability, affect the rights or liabilities of any other person.
(6) The court, before or on granting leave to disclaim, may require such notices to be given to persons interested and impose such terms as a condition of granting leave, and make such other order in the matter as the court thinks just.
(7) The liquidator shall not be entitled to disclaim any property under this section in any case where—
(a) an application in writing has been made to the liquidator by any person interested in the property requiring the liquidator to decide whether he or she will or will not disclaim, and
(b) the liquidator has not, within a period of 28 days after the date of receipt of the application or such further period as may be allowed by the court, given notice to the applicant that he or she intends to apply to the court for leave to disclaim.
(8) Any person damaged by the operation of a disclaimer under this section shall be deemed to be a creditor of the company concerned to the amount of the damages, and may accordingly prove the amount as a debt in the winding up.
Rescission of certain contracts and provisions supplemental to section 615
616. (1) The court may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the court thinks just.
(2) Any damages payable under such an order to any such person shall be deemed to be a debt proved and admitted in the winding up.
(3) Subject to subsection (6), the court, on an application by any person who either claims any interest in any property disclaimed under section 615 or is under any liability not discharged by this Act in respect of any property so disclaimed, has, on hearing any such persons as it thinks fit, the following power.
(4) That power of the court is to make an order for the vesting of the property in, or the delivery of the property to, any person entitled to it, or to whom it may seem just that the property should be delivered by way of compensation for any liability of the foregoing kind, or a trustee for him or her, and on such terms as the court may think just.
(5) On any such vesting order being made, the property comprised therein shall vest accordingly in the person named in the order in that behalf without any conveyance or assignment for the purpose.
(6) Where the property disclaimed under section 615 is of a leasehold nature, the court shall not make a vesting order under this section in favour of any person claiming under the company, whether as under-lessee or as mortgagee by demise, except upon the terms of making that person—
(a) subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up, or
(b) if the court thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date,
and in either event (if the case so requires), as if the lease had comprised only the property comprised in the vesting order.
(7) Any mortgagee or under-lessee declining to accept the making of a vesting order upon such terms as are referred to in subsection (6) shall be excluded from all interest in and security upon the property concerned.
(8) If there is no person claiming under the company who is willing to accept the making of an order upon such terms as are referred to in subsection (6), the court shall have power to vest the estate and interest of the company in the property concerned in any person liable either personally or in a representative character, and either alone or jointly with the company, to perform the lessee’s covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the company.
The text in italics on this page is sourced from the Irish Statute Book and is re-published under the Licence for Re-Use of Public Sector Information made pursuant to Directive 2003/98/EC Directive 2013/37/EU of the European Parliament and of the Council on the re-use of public sector information transposed into Irish law by the European Communities (Re-Use of Public Sector Information) Regulations 2005 to 2015.