Francis Beaufort Palmer.

Company precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) online

. (page 32 of 134)
Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 32 of 134)
Font size
QR-code for this ebook


party aggrieved thereby (sect. 24), and is subject to the close scrutiny and stringent
control of the Board of Trade. Sect. 25 of 1890. On the other hand, subject to Extension o£
these safeguards, the legislature has, by the Act of 1890, extended his powers ; for powers in
with the exception of carrying on business and embarldng on litigation, he may, ^^•^^'
without the sanction of the Court or of the committee of inspection, exercise any of
the powers of sect. 95 of 1862 (stated infra) — powers which, under the old practice,



206



WINDING-UP BY THE COURT. [ChAP. XXI.



Appointment
of liquidator.



How styled.



Security.



Powers and
duties.



ExtcnHion

of pOWCTH.



were exercisable only with the sanction of the Court. See sect. 12 (2) of the Act of
1890.

Sect. 92 of 1862. — For the purpose of conducting the proceedings in winding-up
a company, and assisting the Court therein, there may be appointed a person or
persons to be called an [official] liquidator or [official] liquidators ; and the Court
having jurisdiction may appoint such person or persons, either provisionally or
otherwise, as it thinks fit, to the office of [official] liquidator or [official] liquida-
tors ; in all cases if more persons than one are appointed to the office of [official]
liquidator, the Court shall declare whether any act hereby required or authorized
to be done by the [official] liquidator is to be done by all or any one or more of
such persons. . .

Sect. 94 of 1862. — The [official] liquidator or liquidators shall be described by
the style of the [official] liquidator or [official] liquidators of the particular company
in respect of which he is or they are appointed, and not by his or their individual
name or names ; he or they shall take into his or their custody, or under his or their
control, all the property, efPects, and things in actions to which the company is or
appears to be entitled, and shall perf onn such duties in reference to the winding-up
of the company as may be imposed by the Court.

Sect. 4 (3) of 1890. — When a person other than the official receiver is appointed
liquidator of a company, he shall be styled liquidator, and not official liquidator, of
the company, and the provisions of the Companies Acts relating to the official
liquidator shall, in their application to him, be construed as if the word " official "
were omitted therefrom. Such a person shall not be capable of acting as liquidator
unto, he has notified his appointment to the Registrar of Joint Stock Companies,
and given security (see Chap. XIX.) in the manner prescribed to the satisfaction of
the Board of Trade. He shall give the official receiver such information and such
access to and facilities for inspecting the books and documents of the company, and
generally such aid as may be requisite for enabling that officer to perform hia
duties under this Act.

Sect. 12 of 1890. — (1.) The liquidator of a company which is being wound up by
the Court may, with the sanction either of the Court or of the committee of inspec-
tion, carry on the business of the company, or bring or defend any legal proceeding
in the name and on behalf of the company, or exercise any of the powers conferred
by sect. 159 or sect. 160 of the Companies Act, 1862.

(2.) The liquidator of any such company may, without the sanction of the Court
or of the committee of inspection, exercise any of the other powers conferred on the
liquidator by sect. 95 of the Companies Act, 1862. [See this section below.]

(3.) The exercise by the liquidator of the powers referred to in this section shall
be subject to the control of the Court, and any creditor or contributory may apply
to the Court with respect to any exercise or proposed exercise of any of those
powers.

(4.) The liquidator of a company which is being wound up by order of the Court
may, with the sanction either of the Court or of the committee of inspection,
employ a solicitor or other agent to take any proceedings or do any business which
the liquidator is unable to take or do himself. The sanction aforesaid must be a
sanction obtained before the employment, except in cases of lu-gency, and in
euch cases it must be shown that no undue delay took place in obtaining the
sanction.

Sect. 13 of 1890. — Cjcncral rules may be made for requiring or enabling all or
any of the powers and duties confcircd and imposed on tlie Court by sects. 91, 98,
99, 100, 101, 102, and 107 of the Companies Act, 18G2, to be exercised or performed
by the liquidator as an officer of the Court, and subject to the control of the Court.

Provided that the liquidator shall not, without the special leave of the Court,



DUTIES AND POWERS OF LIQUIDATORS, 207

rectify the register of members, and shall not make any call without either the
Bpecial leave of the Court or the sanction of the committee of inspection.

Sect. 91 of 1862 relates to calling meetings of creditors and contributorics, and
the liquidator's powers to do this arc contained in sect. 23 (2) of 1890, and rr. 47 —
57 of 1890. See Chap. XXXVI.

Sects. 98, 99, and 100 of 1802 relate to settling the lists of contributories, rectify-
ing the register of members, and collecting the assets and applying them in
discharge of liabilities (all of which duties were, under the old practice, imposed on
the Court) ; and Rr. 83 — 91 of 1890 have been made to enable these duties to bo
performed by the liquidator. See Chap. XXXIX.

As to sects. 98 and 99 and the rules thereunder, and as to sect. 100 of 1862 and
R. 91 of 1890, see Chtip. XXVII.

Sect. 102 of 1862 relates to making calls, as to which see Rr. 92 — 95 of 1890, and
Chap. XXXIX.

Sect. 107 of 1862 gives the Court power to exclude creditors not proving vnthin
a certain time. See R. 122 and Form 69 of 1890, and Chap. XXXVII.

The powers of a liquidator as to the admission and rejection of proofs are given
by Rr. 110 — 121 of 1890, and as to declaring and paying dividends by R. 122. See
Chap. XXXVII.

Sect. 98 of 1862 provides, m(er alia, that the Court " shall cause the assets of the Collection
company to be collected and applied in discharge of its liabilities." of assets.

R. 89 of 1890. — The duties imposed on the Court by sect. 98 of the Companies
Act, 1862, with regard to the collection of the assets of the company and the
application of the assets in discharge of the company's liabilities, shall be discharged
by the liquidator as an officer of the Court subject to the control of the Court.

R. 90 of 1890. — For the purpose of the discharge by the Liquidator of the duties
imposed by sect. 98 of the Companies Act, 1862, as varied by sect. 13 of the
Companies ("Winding-up) Act, 1890, and the last preceding rule, the liquidator
shall for the purpose of acquiring or retaining possession of the property of the
company, be in the same position as if he were a receiver of the property appointed Quasi
by the High Court, and the Court may, on his application, enforce such acquisition receiver,
or retention accordingly.

R. 91 of 1890. — The powers conferred on the Court by sect. 100 of the Companies Possession
Act, 1802, shaU. be exercised by the liquidator. Any contributory for the time °* assets,
being on the list of contributories, trustee, receiver, banker, or agent, or officer of
a company which is being wound up under order of the Coui-t shall, on notice
from the liqiiidator, and within such time as he shall by notice in writing require,
pay, deliver, convey, surrender, or transfer to or into the hands of the liquidator
any sum of money or balance, books, pa^Jers, estate, or effects which happen
to be in his hands for the time being, and to which the company is prima facie entitled.

Sect. 95 of 1862. — The [official] liquidator shall have i^ower [with the sanction of Specific
the Court (but see sect. 12 of 1890)] to do the foUowing things :— powers.

To bring or defend any action, suit, or prosecution, or other legal proceeding,
civil or criminal, in the name and on behalf of the company :

To carry on the business of the company, so far as may be necessary for the
beneficial winding-up of the same :

To sell the real and personal and heritable and moveable property, effects, and
things in action of the company by public auction or private contract, with
power to transfer the whole thereof to any person or company, or to sell the
same in parcels :

To do all acts, and to execute, in the name and on behalf of the company, all
deeds, receipts, and other documents, and for that purpose to use, when
necessary, the company's seal :



208



WINDING-UP BY THE COURT. f[CnAP. XXI.



To prove, rank, claim, and clraw a dividencT, in the matter of the bankruptcy, or
insolvency, or seqnesbration of any contributory, for any balance against the
estate of such contributory, and to take and receive dividends in respect of such
balance, in the matter of bankruptcy, or insolvency, or sequestration, as a
separate debt due from such bankrupt or insolvent, and rateably vsdth the
other separate creditors :
To draw, accept, make, and indorse any bill of exchange or promissory note in
the name and on behalf of the company ; also to raise upon the security of the
assets of the company from time to time any requisite sum or sums of money ;
and the drawing, accepting, making, or indorsing of every such bill of
exchange or promissory note as aforesaid on behalf of the company shall
have the same effect with respect to the liability of such company as if such
bill or note had been drawn, accepted, made, or indorsed by or on behalf
of such company in the course of carrying on the business thereof :
To take out, if necessary,' in his official name, letters of administration to any
deceased contributory, and to do in his official name any other act that may be
^ necessary for obtaining payment of any moneys due from a contributory or
fi'om his estate, and which act cannot be conveniently done in the name of the
company ; and in all cases where he takes out letters of administration, or
otherwise uses his official name for obtaining payment of any moneys due
from a contributory, such moneys shall, for the purpose of enabling him to
take out such letters or recover such moneys, be deemed to be due to the
official liquidator himself :
To do and execute all such other things as may be necessary for winding-up the
affairs of the company and distributing its assets :
Control by Sect. 23 of 1890. — (1) Subject to the provisions of the Companies Acts, the liqui-

committee of dator of a company which is being wound up by order of the Court shall, in the
inspection, &c. administration of the property of the company and in the distribution thereof
amongst its creditors, have regard to any dii-ections that may be given by resolu-
tion of the creditors or contributories at any general meeting, or by the committee
of inspection, and any directions so given by the creditors or contributories at any
general meeting shall in case of conflict be deemed to override any directions given
by the committee of inspection.
Callin"- (2) The h'quidator may from time to time summon general meetings of the cre-

ineetings of ditors or contributories for the purpose of ascertaining their wishes, and it shall be
crecutors, ire. j^-g ^^ij to summon meetings at such times as the creditors or contributories, by
resolution, either at the meeting appointing the liquidator or otherwise, may direct,
or whenever requested in writing to do so by one-tenth in value of the creditors or
contributories, as the case may be.
Directions {•^) The liquidator may apply to the Court in manner prescribed for directions in

of Court. relation to any particular matter arising under the winding-up.

(4) Subject to the provisions of the Companies Acts, the liquidator shall use his
own discretion in the management of the estate and its distribution among the
creditors.

Sect. 24 of 1890. — If any person is aggrieved by any act or decision of the liqui-
dator of a company which is being wound up by order of the Court, he may
apply to the Court, and the Court may confirm, reverse, or modify the act or deci-
Bion complained of, and make such order in the premises as it thinks just.
And SCO Chap. XLIX.
Control by Sect. 25 of 1890.— (1) The Board of Trade shall take cognizance of the conduct

Board of ^f liquidatm-H of companies which arc being wound up by order of the Court, and

'^^ '" in the event of any such liquidator not faithfully performing Ids duties and duly

observing all the requirements imposed on 1dm by statute, rules, or otherwise, with



DUTIES AND POWERS OF LIQUIDATORS. 209

respect to the performance of his duties, or in the event of any complaint being
made to the Board by any creditor or contributory in regard thereto, the Board
shall inquire into the matter, and take such action thereon as may be deemed
expedient.

(2) The Board may at any time require any liquidator of a company -which is
being wound up by order of the Court to answer any inquiry made by them in
relation to any winding-up in which the liquidator is engaged, and may, if the
Board think fit, apply to the Court to examine on oath the liquidator or any other
person concerning the winding-up.

(3) The Board may also direct a local investigation, to be made of the books and
vouchers of the liquidator of any company which is being wound up by order of
the Court.

And see Chap. LI.

R. 161 of 1890. — (I) Where a liquidator is appointed by the Court, the official Duty of offi-
receiver shall forthwith put the liquidator into possession of all property of the ^^^^ receiver
company of which the oflBcial receiver may have custody ; provided that such liqui- i{j,,,i(i„fQ_
dator shall have, before the assets are handed over to him by the official receiver, being
discharged any balance due to the official receiver on account of fees, costs, and appointed,
charges properly incurred by him, and on account of any advances properly made
by him in respect of the company, together with interest on such advances at the
rate of four pounds per centum per annum ; and the liquidator shall pay all fees,
costs, and charges of the official receiver which may not have been discharged by
the liquidator before being put into possession of the property of the company, and
whether incurred before or after he has been put into such possession.

(2) The official receiver shall be deemed to have a lien upon the company's assets
until such balance shall have been paid and the other liabilities shall have been
discharged.

(3) It shall be the duty of the official receiver, if so requested by the liquidator,
to communicate to the liquidator all such information respecting the estate and
affairs of the company as may be necessary or conducive to the due discharge of the
duties of the liquidator.

Sect. 21 of 1890. — Every liquidator of a company which is being wound up by Liquidator's
order of the Court shall keep, in manner prescribed, proper books in which he shall
from time to time cause to be made entries or minutes of proceeding-s at meetings,
and of such other matters as may be prescribed, and any creditor or contributory of
the company may, subject to the control of the Court, personally or by his agent
inspect any such books.

R. 143 of 1890. — The official receiver, until a liqiiidator is appointed, and there-
after the liquidator, shall keep a book, to be called the " Record Book," in which
he shall record all minutes, all proceedings had and resolutions passed at any meet-
ing of creditors or contributories, or of the committee of inspection, and all such
matters as may be necessary to give a correct view of his administration of the
company's affairs, but he shall not be bound to insert in the " Record Book " any
document of a confidential nature (such as the opinion of counsel on any matter
affecting the interest of the creditors or contributories), nor need he exhibit such
document to any person other than a member of the committee of inspection.

R. 144 (2) of 1890.— The liquidator shall submit the record book and cash
book, together with any other requisite books and vouchers, to the committee of
inspection (if any) when required, and not less than once every three months.
[And see R. 144 (1), as to cash book, i)ifr(i, Chap. XXIV.]

P. F



books



210



WINDING-UP BY THE COURT, [ChAP. XXI.

Preliminary Steps.

The liquidator, unless he is the official receiver, should bear in mind that before
he can act as liquidator he must give notice of his appointment to the Registrar of
Joint Stock Companies (Form. 187), and must give security to the satisfaction of the
Board of Trade. Until he has done these things he is not capable of acting as
liquidator. See sect. 4 (3) of 1890, p. 190.

The Board of Trade certificate of security having been given, must be filed
at the office of the Registrar in Companies Liquidation, Room 66, Bankruptcy
Buildings.

Subsequent Steps.

The above sections and rules point out some of the principal powers and duties of
the liquidator, but it may be convenient to refer to the principal duties and powers
of the liquidator in greater detail.



Accounts and Audit thereof.

As to the accounts of the liquidator and the audit thereof, see sect. 20 of 1890,
and Rules 135 and 140 of 1890, set out in Chap. XXIV.



Actions.

As to liquidator bringing and defending, see Chap. XXXII. As to restraining.
Chap. XXXIII. When action necessary instead of summons in winding-up, supra,
p. 18.

Appeals from Liquidator.

Sect. 24 of 1890 provides that if any person is aggrieved by any act or decision
of the liquidator of the company which is being wound up by order of the Court,
he may appeal to the Court, and the Court may confirm, reverse, or modify the
act or decision complained of, and make such order in the premises as it thinks just.

In the High Court the application is made by summons, even where the appeal is
from the decision of the official receiver acting as liquidator. See R. 3 of April,
1892 ; National Wholemeal Co., (1892) 2 Ch. 457 (an appeal against the rejection by
the liquidator of a proof).

As to appeals by the liquidator fi'om an order of the Court, see Foitus, mfra.
Chap. XLIX.

Banking Account.

All moneys received by a liquidator in a compulsory winding-up must be paid,
■without deduction, to the Comj:)anies Liquidation Account, unless an account with
any other bank has been authorized by the Board of Trade under sect. 11 of 1890.
Remittances are to bo made once a week, or forthwith if a sum of 200/. has
been received. Sec Board of Trade Regulations, January, 1893, Appendix B., and
Chaps. XXIV. and XXV.

Board of Trade.

Sect. 25 of 1890 places the liquidators under the control of the Board of Trade,
and T'liables the Board of Trade to require information from liiiuidators, and to



DUTIES AND POWERS OF LIQUIDATORS. 211

order a local investigation. And the liquidator has to give security to the satis-
faction of the Board of Trade, which can increase or diminish his security as
occasion may require. See sect. 4 (3) of 1890, supra, and R. 67 of 1890.



Books to be Kept.

The liquidator should apply to the official receiver for delivery of the Record
Book and Cash Book. See Rules 143 and 144 of 1890. As to books to be kept, see
sect. 21 of 1890, and the rules above refeiTed to.

As to handing over on resignation, retirement or removal, see R. 141 of 1890.



BORROWINO.

The power to boiTow, whicb may be exercised without the sanction either of the
Court or the committee of inspection, is conferred by the joint operation of sect. 12
(2) of 1890, and sect. 95 of 1862. See Chap. XXVIII.



Calls.

The power to make calls cannot be exercised until a list of contributories has been
settled, and not then until the special leave of the Court or the sanction of the
committee of inspection has been obtained. The power is conferred by the joint
operation of sect. 13 of 1890, and Rules 92 and 95 of 1890. See Chap. XXXIX.



CAERYma ON Business.

The liquidator can caiTy on the business of the company with the sanction either
of the Court or of the committee of inspection. See sect. 12 (1). The matter is
dealt with in Chap. XXVI.

Collection of Assets.

See sect. 98 of 1862, and Rr. 89, 90, and 91 of 1890. In order to collect the pro-
perty of the company, the liquidator should by himself or his agents take possession
and place in safety the movable assets, and should give notice to all debtors calling
on them to pay to him the debts owing from them respectively to the company, and,
if necessary, he should take legal proceedings to obtain possession, and to recover
moneys and assets outstanding. See further, " Possession," infra.



Committee of Inspection.

See sect. 9 of 1890 as to the appointment and proceedings of the committee.
If there is no committee, see R. 169 of 1890. See further, as to committee of
inspection, Chap. XXII.

Compromises.

The power to compromise is conferred by sects. 159 and 160 of 1802. By sect 12
(1) of 1890 the liquidator is empowered to exercise the powers conferred by those
sections with the sanction either of the Court or of the committee of inspection.
See further Chap. XL VII.

p2



212



WINDING-UP BY THE COURT. [ChAP. XXI.



CONTEIBUTORIES ,



See Chap. XXXIX., p. 446.



Control of Court.

The exercise by the liquidator of his powers is subject to the control of the Court.
Sects. 94—97 of 1862 ; sect. 12 (3) of 1890, and sect. 13 of 1890 ; and Rr. 89, 90 of
1890.

Creditors.

It is the duty of the liquidator to find out from the books and papers of the com-
pany and the statement of affairs who are the creditors of the company. If any
creditor omits to put in his claim, the liquidator should communicate with him.
After a winding-iip order the statutory limitation does not run as against the
creditors of the company, and mere delay in giving in the claim does not exclude
the creditors from participating in the fund. See General Rolling Stock Co., 7 Ch.
646, and Form 431.

And see further as to creditors, i^osf, Chap. XXXVII.



Debentures.

The subject of debentures and debentui'e stock is dealt with in some detail in
Chap. X XX VIII.

And see Part I., pp. 612, 744.



How far
directions of
creditors, &c.
binding.



Directions of Court, Creditors, Contributories, and Committee.

Under sect. 23 (1) of 1890, the liquidator is " to have regard " to the directions of
the creditors or contributories, or committee of inspection, and jjaragraph (3) of the
same section provides that the liquidator may apply to the Court in manner pre-
scribed for directions in relation to any particular matter arising under the
winding-up. The application should be by summons (see R. 3 of Api-il, 1892),
sui^ported by the necessary evidence.

The expression "have regard to the dii-ections of the creditors, &c.," does not
import that the liquidator must obey such directions. No doubt it would not be
projjer to act contrary to the directions so given, but if the liquidator thinks that it
would not be expedient to comply with such directions, he can apply to the Court
for directions, and the Court may make an order directing him to disregard the
prior directions. Jix parte Cocks, 21 C. Div. 405 (decided on similar provisions in
the Bankruptcy Act, 1869). Indeed, the liquidator is bound to consider the pro-
priety of the directions given by the creditors, contributories, or coimnittee of
ins^icction, fur if those directions are unreasonable, and he acts thereon, he may be
ordered iiersonally to pay the resulting costs. £.v parte Brown, 17 Q. B. Div. 492.
In this case the committee of inspection had dii-ccted the trustee to reject a proof
on mere technical grounds ; the trustee had acted on these directions, but the Court
overruled his decision, and directed that he should personally pay the costs, and the
Court of Appeal confirmed tho decision, and ordered the trustee personally to pay
the costs of the appeal. In giving judgment Lord Esher, M. R., said that, " The
argument comes to this, that if a committee of inspection direct a trustee to take a
point and go to law about it, although the view of tlic committee may be fiivolous



DUTIES AND POWERS OF LTQUIDATOT^S. 213

and nonsensical to the last degree, yet the trustee is justified by their direction in
spending the assets of the estate, and the judge has no discretion under such circum-
stances to make him pay the costs. In my ojiinion that is not the meaning of the
Act. Although the trustee is to have regard to the directions of the committee of
inspection, he is not thereby justified in entering into litigation or otherwise acting



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 32 of 134)