Francis Beaufort Palmer.

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

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shaU otherwise order, be fixed by the committee of inspection, and shall be in the
nature of a commission or percentage, of which one part shall be payable on the
amount realised after deducting the sums (if any) paid to secured creditors out of
the proceeds of their securities, and the other part on the amount distributed in
dividend.

(2) If there is no committee of inspection, the remuneration of the liquidator
shall be in accordance with the scale of percentage payable for realisations and dis-
tributions by the official receiver as liquidator.

R. 155 of 1890. — Except as pro\uded by the Acts or these rules, no liquidator
shall be entitled to receive out of the estate any remuneration for services rendered
to the company, except the remuneration to which under the Acts and rules he is
entitled as liquidator.

And as to purchasing property of the company without leave, or making pur-
chases from persons whose connection with the liquidator might result in profit to
himself, see Er. I5G and 157 of 1800, and pp. 275, 291.

Sect. 11 (4) of 1890. — If any such liquidator at any time retains for more than
ten days a sum exceeding fifty pounds, or such other amount as the Board of Trade
in any particular case authorize him to retain, then, unless he explains the reten-
tion to the satisfaction of the Board of Trade, he shall [inter alia) be liable to dis-
allowance of all or such part of his remuneration as to the Board shall seem
just.

Looking to the terms of R. 154 (1) of 1890, supra, the Court may by oi'der prevent
the committee of inspection from fixing the liquidator's remuneration, and may
then fix such remuneration itself under sect. 93 of 1862 ; but it seems very doubtful
whether the Court can order remuneration on any footing other than a commission
or percentage on the amount realized and distributed. This rather suggests a com-
mission or percentage on tlic lines of that given to the official receiver by the Order
as to Foes of 17th December, 1891 (Appendix B.) ; but the preliminary words
of R. 154, together with sect. 93 of 1862, supra, may be sufficient to allow the



REMUNERATIOX OF LIQUIDATOR.



231



Court to allow the remuneration on some other footing, in ■n-hicli case the above
regulation of 18G8 may still be a guide to the Court.

The committee of inspection does not always represent the interests of both cre-
ditors and contributories, and it is obvious that in many cases the remuneration
will be more properly fixed by the Court than by the committee.

Where there is no committee of inspection, R. 154 (2) seems to direct peremptorily
that the remuneration is to be only according to the scale of percentage in the order
of 17th December, 1891.

The provisions of R. 154 apparently only apply in the case of a liquidator other Remuneration
than the official receiver. of official

Table B., annexed to the order of 17th December, 1891, states what fees are T;r,„j/i„ff,r
payable to the official receiver — " I. "Where the official receiver acts as provisional
liquidator only. II. Where the official receiver is continued as liquidator of the
company (including his services as provisional liquidator). III. Where the official
receiver is continued as liquidator of the company for the purpose of carrying out a
reconstruction or other scheme by which the affairs of the company are wound up
otherwise than by the realization and distribution of the assets." Table B. also
provides for payment to the official receiver of — IV. Travelling and other ex-
penses ; and V. Threepence in the pound on " every payment under sect. 15 (of
1890) of money out of the Companies' Liquidation Account."

But an outside liquidator, when remunerated by a commission or percentage. Stationery
seems to be not entitled to be paid all the remuneration payable to the official expenses,
receiver under the order of 17th December, 1891. Whether there is a committee of
inspection or not, his remuneration is to be by a percentage only for (1) realization
and (2) distributions. He seems, therefore, to be not entitled to the capitation fee
of 11. per ten members, &c., payable to the official receiver when continued as liqui-
dator. This is considered as a fee for stationery ; and it is understood that the
Board of Trade does not allow an outside liquidator any stationery expenses.



Priority of Eemu^steration.

The priority of a liquidator's remnneration is now regulated by R. 31 of 1890 (set
out in Chap. XLVIIL), from which it appears that many charges are payable in
priority to it. See London Metallurgical Co., (1895) 1 Ch. 758.

A liquidator should bear in mind that he is not entitled to receive anything out Ranks after
of the assets of the company by way of remuneration until all the costs and costs.
expenses having priority under R. 31 of 1890 (iucluding the bill of costs of the
solicitor employed by the liquidator) have been paid in full. And see Re Masscy, 9
Eq. 367; Dronjicld Co., 23 C. Div. 511; Dominion of Canada Co., 27 C. Div. 33;
Batten v. Wedgwood Coal Co., 31 C. D. 346. But this does not prevent payments
being made to him on account of remuneration where the assets wiU clearly or
probably be sufficient to cover the above costs and expenses.

Moreover, where the assets are encumbered, e.g., by mortgages or debentures, Incura-
the remuneration of the liquidator ranks after the rights of the incumbrancers, trances.
R. 154 (1), supra; Oriental Motels Co., 12 Eq. 126; Eegenfs Canal Iron Works Co., 3
C. Div. 411. Compare these cases with JDavij v. Frice, W. N. (1883) 226; 28
S. J. 153; Onncrod, Grierson S; Co., W.N. (1890) 217. Accordingly, where there
are debentures outstanding, the liquidator should get a debenture - holder to
bring an action to enforce the debentures. In such case the liquidator is generally
appointed receiver, and thus secures priority. But the remuneration of the
liquidator ranks before the claims of unsecui-ed creditors.



232



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



Payment of, and Accounts as to, Eemuneeation.

The authority for the liquidator's remuneration, whether by resolution of the
committee or order of the Court, must be entered in the record book before such
book is sent to the Board of Trade, with the accounts, for the purpose of being
audited. See R. 143 of 1890, p. 209, and Form 213.

Apparently, although the remuneration, when by way of commission or per-
centage, is earned from time to time as assets are realized or amounts distributed
(see R. 154, supra), the liquidator must not pay himself the remuneration as it
from time to time becomes due. He must pay "the money received by him,"
which means " all moneys received .... without deduction" into the Companies'
Liquidation Account (unless he has a special banking account). See sect. 11 (2) of
1890, and Reg. 1 of Board of Trade Regulations of January, 1893 (Appendix).
And see Chap. XXIV.

When any remuneration has become due, the liquidator should fill up the proper
form, to be obtained on application to the Board of Trade, presumably C. No. 6
{post, Form 245). This form when filled up must be sent direct to the Board of
Trade, Bankruptcy Department. Payment is made by cheque, but the payment
does not preclude disallowance of the amount should it be found to be irregular on
audit of the liquidator's accounts. Probably no sum will be paid on account of
remuneration until after some audit of accounts showing that something has been
at any rate realized, and that enough money is left to provide for the payments
which have priority over the remuneration.

The amount received for remuneration must be entered in the cash book (Reg. 9
of Jan. 1893), and on the credit side of the summary of accounts under R. 139 of
1890 (see Form 217).

Even where a special bank account has been authorized under sect. 11 (3) of
1890, all moneys received must be paid into the appointed bank. Reg. 4 of Jan.
1893. Payment in this case is made by cheque signed by the liquidator, and
countersigned in pursuance of R. 81 of 1890. See Chap. XXV.

Entries must be made in the cash book in accordance with Reg. 9 of Jan. 1893,
and the amount must be entered in the summary. See supra.



i Form 208.

Summons for
liquidator's
remuneration
to be fixed by
the Court.



{Title.)

Let all persons concerned, &c., on tlie applicon of A. B., of &c., the
liqr of the above-named coy, that the Ct may direct what salary or
remuneration, by way of commission or percentage or otherwise, shall
be paid to the sd A. B., as such liqr as afsd [wt case of two or more
lirjrs a further direction must he asked fur, viz., and in what propor-
tions such remuneration shall bo distributed amongst them].

See R. 154 (1) of 1890, supra.

As a general rule, however, the remuneration is fixed by the committee of inspec-
tion. For resolution of committee fixing remuneration, see Form 200.

When an application is made to the Court it must be supported by an affidavit
showing wliy the application is made to the Court, instead of the remuneration
being fixed by the committee.

The affidavit should also state particulars as to the nature and supposed value of
the assets, the estimated amount oi liabilities, and any special circumstances which are
material. Many of these particulars may be obtained from the statement of aflfairs.
See Form 146.



2-i3



CHAPTER XXIV.

ACCOUNTS OF LIQUIDATOR; AND PROCEDURE UNDER SECT. 15 OF 1890.



Accounting to Committee of Inspection.

Sect. 21 of 1890. — Every liquidator of a company whicli is being wound up by Books to be
order of the Court shall keep, in manner prescribed, proper books in which he shall kept,
from time to time cause to be made entries and minutes of proceedings 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 sucli books.

As to the books prescribed, see Er. 143 and 144 of 1890, infra.

Er. 135 to 144 of 1890 are as follows :—

135. The committee of inspection shall not less than once every three months Audit of
audit the liquidator's cash book and certify therein under their hands the day on cash book by
which the said book was audited.

136. — (1.) Every liquidator shall, at the expiration of six months from the date Board of
of the winding-up order, and at the expiration of every succeeding six months Trade audit
thereafter until his release, transmit to the Board of Trade a copy of the cash book *^* accounts.
for such period in duplicate, together with the necessary vouchers and copies of the
certificates of audit by the conmiittee of inspection. He shall also forward with the
first accounts a summary of the company's statement of affairs, in such form as the
Board of Trade may direct, showing thereon in red ink the amounts realized, and
explaining the cause of the non-realization of such assets as may be unrealized.
See Form 215.

(2.) When the assets of the company have been fully realized and distributed, the Account
liquidator shall forthwith send in his accounts to the Board of Trade, although the "when assets
six months may not have expu'ed.

(3.) The accounts sent in by the liquidator shall be certified and verified bj^ him. Verifi-'ation.

137. — (1.) Where the liquidator carries on the business of the company, he shall Trading
keep a distinct account of the trading, and shall incorporate in the cash book the 'Account,
total weekly amount of the receij^ts and payments on such trading account.

(2.) The trading account shall from time to time, and not less than once in every Verifying
month, be verified by affidavit, and the liquidator shall thereupon submit such same,
account to the committee of inspection (if any) , or such member thereof as may be
appointed by the committee for that purpose, who shall examine and certify the
same.

138. When the liquidator's account has been audited, the Board of Trade shall Filing copy
certify the fact upon the account, and thereupon the duplicate copy, bearing a like accounts,
certificate, shall be filed with the proceedings in the winding-up.

139. — (1.) The liquidator shall transmit to the Board of Trade with his accounts Summary.



234



wixDiNCJ-Tir BY THE coujiT. [Chap, XXIV.



Cost of piint-
ing, &c.

AflSdavit of
no receipts.



Proceeding
on resigna-
tion, &c.



Expenses of
sales.



Record book.



Cash book.



Submitting
books, iS:c. to
couuuittce.

Accounting
by official
receiver.



a summary of such accounts in such form as the Board of Trade from time to time
direct, and, on the approval of such summary by the Board of Trade, shall forth-
with obtain, prepare, and transmit to the Board of Trade so many printed copies
thereof, duly stamped for transmission by post, and addressed to the creditors and
contributories, as may be required for transmitting such summary to each creditor
and contributory.

(2.) The cost of printing and posting such copies shall be a charge upon the
assets of the company.

140. Where a liquidator has not since the date of his appointment or since the
last audit of his accounts, as the case may be, received or paid any sum of money
on account of the assets of the company, he shall, at the time when he is required
to transmit his accounts to the Board of Trade, forward to the Board an affidavit of
no receipts or payments.

141. Upon a liquidator resigning, or being released or removed from his office, he
shall deliver over to the official receiver, or, as the case may be, to the new liquidator,
all books kept by him, and all other books, documents, papers, and accounts in his
possession relating to the office of liquidator. The release of a liquidator shall not
take effect unless and until he has delivered over to the official receiver all the
books, papers, documents, and accounts which he is by this rule required to deliver
on his release.

142. Where property forming part of a company's assets is sold by the liquidator
through an auctioneer or other agent, the gross proceeds of the sale shall be paid
over by such auctioneer or agent, and the charges and expenses connected with the
sale shall afterwards be paid to such auctioneer or agent, on the production of the
necessary certificate of the taxing officer. Every liquidator, by whom such
auctioneer or agent is employed, shall, unless the Court otherwise orders, be
accountable for the proceeds of every such sale.

143. The official receiver, until a liquidator is appointed by the Coiu't, 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 meeting
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.

144. — (1.) The official receiver, until a liquidator is appointed by the Court, and
thereafter the liquidator, shall keep a book to be called the " cash book " (which
shall be in such form as the Board of Trade may from time to time direct), in which
he shall (subject to the provisions of these rules as to trading accounts) enter from
day to day the receipts and payments made by him.

(2.) The liquidator shall submit the record book and cash book, together with any
otlicr requisite books and vouchers, to the committee of inspection (if any) when
required, and not less than once every three months.

E. 168 of 1890. — (1.) Where a liquidator is appointed by the Court, the official
receiver shall account to the liquidator.

(2.) If the liquidator is dissatisfied with the account or any part thereof, he may
report the matter to tlie Board of Trade, who sh.-dl take such action (if any) thereon
as it may deem expedient.

(3.) The provisions of these Rules as to liquidators and their accounts shall not
apply to the (jlHciul receiver when he is li([uidator, but he shall account in such
manner as the Board of Trade may from time to time direct.



ACCOUNTS OF LIQUIDATOR. 235

In the actual casli book in the form appi-oved "by the T5oard of Form 209.

Trade, under E. 114 of 1890, on the debit side, under the word TTTT T

" Receipts," there arc nine columns (of which the last seven are (with

ruled for £ s. f/. entries) headed : (1) "Date"; (2) "Particulars"; analysis).

(3) "Total"; (4) "Drawn from Bank"; (5) "Debts Collected";

(6) "Property Realized"; (7) "Receipts from Securities held by
Creditors " ; (8) " Calls" ; (9) " Other Receipts." On the credit side,
under the word "Payments," there are eleven columns, headed:
(1) "Date"; (2) "Particulars"; (3) " Voucher Nos." (in red) ;

(4) "Total"; (5) "Paid into Bank"; (G) "Costs of Realization";

(7) "Preferential Creditors and Rent"; (8) "Payments to redeem
Securities"; (9) " Dividends Paid " ; (10) " Repayments to Contribu-
tories " ; (11) "Other Payments." Columns numbered (4), (5), (7),
(8), (9), (10), and (11) are all ruled for £ s. d. Column (G) is
subdivided into eight sub-columns, headed respectively: (a) "Board
of Trade and Court Fees" ; (b) "Law Costs of Petition" ; (c) "Law
Costs after Winding-up Order"; (d) " Remuneration of Manager and
Liquidator"; (e) " Official Receiver's Commission on Assets Realized,
and Amount distributed in Dividend or paid to Contributories " ;
(f) " Charges of Auctioneer, Accountant, Shorthand Writer, &c., as
taxed"; (g) "Notices in Gazette and Local Papers"; (h) "Incidental
Expenses, including Possession."

The form of the official receiver's cash book is the same as that of other
liquidators.

Reg. 9 of Jan. 1893. — Money -withdrawn from the bank should not be treated as How entries
receipts from realizations, but should appear only in the "Drawn from Bank" made,
column of the cash book, the application of the money being entered in the
"Payments" column. The payments into the bank should appear only in the
"Paid into Bank" column in the cash book.

In the case of dividends to creditors, "the total amount of the dividend payable
should be charged in the cash book in one sum.^' See Reg. 11 of Jan. 1893,
Appendix B.

Under no circumstances should unclaimed dividends be credited to the estate
without the previous sanction of the inspector-general. See Reg. 11 of Jan. 1893.

A statement of the balance shown by the bank columns of the cash book is
necessary to obtain the inspector-general's certificate of the balance standing to the
credit of the company in the company's liquidation account.

See Rr. 135 and 144 of 1890, supra, as to submitting the books, &c., to the
committee, and as to the following certificate.

As to the entries in the cash book where a trading account is kept, see R. 137 of
1890, supra ; and see infra.



{Title.) Form 210.



We, the undersigned, members of the committee of inspection in Certificate by

the windinff-up of the above-named coy, hereby certify that we have ?o"inuttee of
o i J 1 J J luspection as

examined the foregoing account with the vouchers, and that to the to audit of



236



WINDING-Ur BY THE COUKT. [ChAP. XXIV.



liquidator's
accounts.
Form 76 of
1890.



Course where
no committee.



Non-attend-
ance of com-
mittee.



best of our knowledge and belief the sd account contains a full, true,
and complete account of the liqr's receipts and payments.
Dated this day of , 189—.

A. B. \

C. D. > Committee of inspection.

E. P. )

If there is no committee of inspection, the liquidator must submit the cash book,
&c., to the official receiver, on whom the duty of the committee will fall, subject
to the directions of the Board of Trade. See sect. 9 (9) of 1890, and R. 169 of
1890.

Qucere, whether the official receiver, when liquidator, need submit any accounts
to the committee of inspection. See R. 168 (3) of 1890, supra.

If the committee of inspection fail to attend the meeting called for audit, the
liquidator must insert a memorandum to that effect in the cash book (see Notes as
to Eeqmrements at Audit, infra), and also in the record book.



Form 211.

Liquidator's
trading
account.
Form 80 of
1890.



{Title.)
G. H., tbe liqr of tbe above-named coy, in account with, the estate.

Receipts. Payments.

Dr. Cr.



Date.



Bate.



, liqr.

{Date)

We have examined this account with the vouchers, and find the
same correct, and we are of opinion the expenditure has been proper.

Dated this day of , 189—.

Committee of inspection
[_or member of the committee of inspection].

As to the trading account, to be kept when the liquidator carries on the company's
business, see R. 137 of 1890, supra. This rule also requires the affidavit in the
next form to be made. The certificate mentioned in R. 137 will be found at the
foot of the above form.



Form 212.

Aflidavit
verifying'
liquidator's



I,



[Title.)
-, the liqr of the above-named coy, make oath and say that



the account hereto annexed is a full, true, and complete account of all



ACCOUNTS OF LIQUIDATOR.



23:



money received and paid 1)}' me or by any person on my boiuilf in trading
respect of the carrying on of tlio trade or business of the coy, and Form 81 of
that the sums paid by me as set out in such account have, as I believe, 1890.
been necessarily exjiended in carrying on such trade or business.
Sworn, &c.

, liqr.



Board of Trade Audit.

Sect. 20 of 1890. — (1.) Every liquidator of a company which is being wound up How liqui-
bv order of the Court shall, at such times as may be prescribed, but not less than ""tor s

»/ J. HCCOUtlLS

twice in each year during his tenure of office, send to the Board of Trade, or as they audited
direct, an account of his receipts and payments as such liquidator.

(2.) The account shall be in a prescribed form, shall be made in duplicate, and
shall be verified by a statutory declaration in the prescribed form.

(3.) The Board of Trade shall cause the accounts so sent to be audited, and for
the purpose of the audit the liquidator shall furnish the Board with such vouchers
and iuformation as the Board may require, and the Board may at any time require
the production of and inspect any books or accounts kept by the liquidator.

(4.) When any such account has been audited, one copy thereof shall be filed and Filing and
kept by the Board, and the other copy shall be filed with the Court, and each copy inspection,
shall be open to the inspection of any creditor, or of any person interested.

(5.) The Board of Trade shall cause the account or a summary thereof when Summary for
audited to be printed, and shall send a printed copy thereof by post to every creditor ^^^cli ors.
and contributory.

See also Rr. 136 — 144, supra.



The following circular explains authoritatively what is required of a liquidator
on a Board of Trade audit : —

It is requested that the reply to this circular may Form 213.

be addressed to the Inspector General in Companies 7^. ', ; 7

Liquidation, Whitehall Yard, London, S.W., and Board of

that the following number may be quoted : — Trade as to



Audit No.



audit.



The Companies (Winding-up) Act, 1890.

Board of Trade, London, S.W.,

Sir, , 189—.

Re .

I beg to remind you that under the provisions of sect. 20 of " The
Cos (Winding-up) Act, 1890," and E. 136 of "The Cos (Winding-up)
Rules, 1890," an audit of your accounts in this matter will become due

on the , and to request that you wiU, within seven days of that

date, forward a copy of the cash book, verified by afft (form annexed),
with a 2*. cos (winding-up) stamp affixed thereto, and a copy for filing,
each bearing copies of the certificates of audit by the committee of



238 WINDING-UP BY THE COURT. [ChAP. XXIV.

inspection, together witli the necessary vouchers, the record book, and
a draft summary of the account for approvaL (E. 139.)
I am, Sir,

Your obedient servant,

JonN Smith,
Inspector- General m Cos Liquidations,
To .

Note. — Rule 140 prescribes that, &c.

[At Back.]

1. If the committee of inspection fail to attend the meeting called
for audit, a memdum to that effect should be inserted in the cash book,
and the accounts should be forwarded without delay.

2. At the first audit the liqr is required to furnish two copies of the
cash book from the date of the winding-up order, including the receipts



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 35 of 134)