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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shall pay any sums received by him as liquidator into his private banking account.

K. 80 of 1890. — All payments out of the Companies Liquidation Account shall be
miuh: in sikIi manner as the Board of Trade may from time to time direct.

E. 81 of 1890. — Wliere the liquidator is authorized to have a special bank account
he shall fortliwith pay all moneys received by him into that account to the credit
of the liquidator of the company. All payments out shall bo made by cheque
payable to order, and every chcqiio shall have marked or written on the face of it
the name of the company, and shall bo signed by the liquidator, and shall be



BANKING ACCOUNT AND INVESTMENT. 267

countersigned by at least one member of the committee of inspection, and by such
other person, if any, as the committee of inspection may appoint.

E. 82 of 1890. — Where application is made to the Board of Trade to authorize the
liquidator to make his payments into and out of a special bank account the Board
of Trade may grant such authorization for such time and on such terms as they may
think fit, aud may at any time order the account to bo closed if they arc of opiuion
that the account is no longer required for the purposes^mentioned in the application.



Companies Liquidation Account.

Although sect. 11 (6) of 1890 [supra], forbids a liquidator to pay money into his
private banking account, he is not expected, in the intervals between making pay-
ments into the Companies Liquidation Account, to carry the mouey about with him
in his pocket or leave it in his desk.

In practice, the liquidator submits the name of some bank to the Board of Trade Special
for their approval, and into this pays money received by him from time to time to accoiint.
the credit of his separate account as Liquidator of the particular company. He
must not, however, draw cheques on this account for payments to creditors or others
in the liquidation, but only for the piu'pose of paying the money into the Com-
panies Liquidation Account at the Bank of England, in pursuance of the directions
of the Board of Trade.

Once a week, or forthwith if a sum of 200^. has been received, the liquidator
must (where there is no special bank account) pay all the money received by him
(including what he has paid into the above-mentioned bank), without deduction,
into the Companies Liquidation Account at the Bank of England. A separate How com-
account is not kept by the Hquidator with the Bank of England, but an account is panics liqui-
" kept by the Board of Trade of the receipts and payments in the winding-up of ^'^tion account
each company" (see sect. 17 (1) of 1890, infra), and the Inspector-General's
certificate of the balance standing to the company's credit will be given on the
application of the liquidator. To be in a position to make his payments regularly
the liquidator must apply to the Inspector- General in Companies Liquidation
(4, Whitehall Yard, S.W.), for a supply of the necessary fonns. These will
include forms of the " Receivable Order," which is known as Form C, No. 7.
This form must be filled up with particulars of the amounts of the cheques, and
notes and gold (if any), and the other particulars pointed out by the foi-m, and
must be sent, with the cheques, Sec, to the Bank of England, Law Courts Branch,
London. (See Regulations 1, 2, of January, 1893, Appendix B. ; and Form 242,
infra.)

Half-pence should not be included in the remittances, and such remittances may
be made dii-ect to the above-named bank crossed "Bank of England, credit of
Companies Liqviidation Account." (Reg. 1.) By the same post the countei-part
or advice letter (Form 243), which is annexed to the receivable order, must be sent,
duly filled up, to the Assistant Secretary, Finance Department, Board of Trade.

As to the penalties to which the hquidator subjects himself by keeping money for
over ten days, see sect. 11 (4) of 1890, supra.

Where the liquidator neglects or refuses to pay money into the Companies Surcharge
Liquidation Account, the Board of Trade can surcharge him with interest under
sect. II (4). It has also power to audit his accounts (see Chap. XXIV.). The
siircharge or result of audit having been certified, application may be made to the
Court by summons for an order on the liquidator to pay in the amoimt siu'charged,
or in his hands.



268



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



BiUaof
exchange.



Payments out
of companies
Hqiiidation
account.



Cheques.



No general form of authority, under sect. 11 (4) of 1890, to retain more than 50^.,
has, it is believed, been yet issued by the Board of Trade.

All cuiTent bills of exchange must also bo sent to the Companies Liquidation
Account (Reg. 3 of January, 1893, Appendix; and compare sect. 104 of 1862).

But, although a liquidator must pay money into the Companies Liquidation
Account, he cannot draiv cheques on that account.

He has to make many disbursements in the first place out of his own pocket, and
to obtain repayment he must fill up and send to the Inspector- General what is
known as Form C, No. 5 [infra, Form 244).

Payment is made to the liquidator by cheque or money order out of the moneys
standing to the credit of the company in the Companies Liquidation Account
(Reg. 5 of January, 1893).

If cheques are reqmred by the liquidator, he must fill up and send to the Inspector-
General Form C, No. 6 (Form 245, infra).

At the foot of the Form C, Nos. 5 and 6, is a note stating in more detail what is
provided by Reg. 7 of January, 1893, viz., that "under no circumstances will the
Board of Trade hold themselves responsible for payments made on the requisition of
the liquidator."

As to obtaining the Inspector- General's certificate of the balance standing to the
company's credit, see Reg. 8 of January, 1893 (Appendix B.).

As to how moneys drawn from the bank are to be entered in the cash book, see
Chap. XXIV.

As to applications for the cancellation of cheques, &c., see Reg. 10 of January,
1893 (Appendix B., p. 918).



Form 241.

Directions to
liquidator as
to paying into
companies
liquidation
account.



Board of Trade, Bankruptcy Department,

4, Whitehall Yard, London, S.W.
189—.

It is requested that in any reply to this letter, and
in all applications for cheques and advices of remit-
tances to companies liquidation account, the follow-
ing number may be quoted : —



Re the Coy, Limtd,



Ct



No.



No. L/F. .

- 189—.



Sir, — I have to inform you that the sum of pounds, shillings

and pence (£ — : ) is standing at the credit of the cos

liquidation account, and is held at your disposal as liqr in the above
matter.

I am also to enclose forms for your use when remitting money to
the Bank of England and for advising the Board of Trade thereof. A
further supply of these forms will be transmitted to you on the receipt
of an applicon.

I am, Sir, your obedient servant,

JoiTN" Smith,
To . Inspector-General iu Cos Liquidation.



BANKING ACCOUNT AND INVESTMENT. 269

[7b he enclosed ivith remittance to the Bank of England. ~\ Form 242.

Cos (Winding-up) Act, 189—. C. No. 7. Receivable

order and

Receivable Order. certificate of

payment.

Sir, — Mr. , liqr at , is authorized to pay to the credit of tlie Form C,

cos liquidation account the sum of pounds, shillings, and ^'

pence, the particulars of which are stated below, and I am to

request you to receive the same accordingly.

I am, Sir, your obedient servant,

Cosmo Monkhouse, Assistant Secretary.

The Agent of the Bank of England,

Law Cts Branch, Temple Bar, London, W.C.
, Address to which certificate of receipt should be forwarded.

[In the margin opposite tlie words above, is a single cash column, headed
" Amounts." Outside this— as on a banker's paying-in slip — are the words
"Cheques drawn on," "Total of cheques," " Bank of England notes," "Other
notes," " Gold," " Total."]

It is particularly requested that the liqr will write his name and
address clearly and legibly. Letters addressed to the Bank of Eng-
land must be prepaid.

[Here follow four columns, headed respectively — "Court," "No. of case,"
" Companies on account of which remittance is made," " Amount."]

Board of Trade.

I hereby certify that the above-mentd sum has been credited to the
cos liquidation account of the Bank of England.

, Assistant Secretary of Board of Trade.

189—.



[7b he posted unsealed.'] Form 243.



[The form is addressed, " On Her Majesty's service. The Assistant Secretary, Liquidator's

Finance Department, Board of Trade, Loudon, S.W. Compauies."] advice letter

'■ ' ' ' ^ ■' oi payment

in.

Cos ("Winding-up) Act, 1890. Form C

189-. ''°-'- '

Sir, — I have to acquaint you that I have remitted to the Bank of

England (Law Courts Branch), the sum of £ , shillings, and

pence (as detailed in the margin) to be placed to the credit of the

" cos Hquidation account."



270



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



Particulars of the cos and respective amounts to be credited are stated
below.

I am, Sir, your obedient servant,

Signature , Liqr.

Address in fuU .



The Assistant Secretary, Finance Department,
Board of Trade, London, S.W.

[In the margin is cash column, -with the words opposite, as in the last Form, with
the following words beneath — " Distinguishing between your own cheques and
those received on account of the company, but not realized by you." Below the
words printed above are five columns, headed respectively — "Court," "No. of
case," "Companies on account of which remittance is made," "Ledger folio,"
"Amount," with the words below, "Total remittances, as stated above."]

It is particularly requested that remittances may be made direct to
the Bank of England, Law Cts Branch, London, by cheque crossed
" Bank of England, credit of cos liquidation account."



Form 244.

Notice to
Board of
Trade that a
cheque is
required for
repayment of
liquidator's
advances.
Form C,
No. 5.



Re



Cos (Winding-up) Act, 1890.

For Eepayment of Advances. Ledger folio.

Court , No. —

Date —



189—.
189—.



Sir, — I hereby certifj^ that the under-mentioned payments, amount-
ing to £ : on account of the above coy have been made

by me out of my own moneys, and such payments are now chargeable
against the sd coy, and I have to request the same may be repaid
to me. The balance shown by my books as standing to the credit of
the coy in the cos liquidation account at the Bank of England is

£ : .

Yours obediently,

Signature of Liqr .

The Inspector-General in Cos Liquidation,

4, Whitehall Yard, London, S.W.

, Address to which cheque should be forwarded.

[Here follow five columns headed respectively — " Name of person to whom pay-
ment lias been made," " Consideration," "No. of voucher," "Date of payment,"
" Amount."]

Note. — This form nhould not he ((crontpnnird hij vouchers, and it must be dis-
tinctly understood that any paymoiits made on this application arc made on the sole
respoiiHibility fif Ww liquidator, and arc in no way to be taken as sanctioning the
same or prfcluding disallowance should they be found to be irregular on the audit
of the li(piidator's accounts.



BANKING ACCOUNT AND INVESTMENT. 271

Cos (Winding-up) Act, 1890. Lodger . Form 245.

Court , No. , 189 — . Notice to



Be . Date , 189—.



Board of
Trade by a



Sir, — I beg to inform you tliat it appears by my books that the sum li?T*^.f**^"^

of £ : stands to the credit of the above coy with the arc required.

cos liquidation account at the Bank of England, and that the sum of ^°™ '

£ : is required as set forth below.

Tours obediently,

, Signature of Liqr.

The Inspector-General in Cos Liquidation,
4, Whitehall Yard, London, S.W.

, Address to which cheques should be forwarded.

[Here follow three columns, headed respectively — "Name, occupation, and
address of person to whom due," "State general nature of consideration,"
"Amount."]

In all cases of payment to executors, trustees, representative ofificials, &c., the
name or names should be inserted in the application.

Note. — This form should be sent direct to the Board of Trade, Bankruptcy de-
partment. It should not be accompanied by ranchers, and it must be distinctly under-
stood that any payments made in accordance therewith are made on the sole re-
sponsibility of the liquidator, and are in no way to bo taken as sanctioning the same
or precluding disallowance should they be found to be irregular on the audit of
the liquidator's accounts.

Special Bank Account.

As to when this will be authorised, see sect. II (3) of 1890, supra. For resolution
of committee of inspection in favour of special bank account, see Form 202.

As to the restrictions which may be imposed by the Board of Trade, and their
power to close the account, see R. 82 of 1890, supra.

" ^^^ moneys received must be paid into the appointed bank" (Reg. 4 of Jan.
1893, Appx.), " to the credit of the liquidator of the company." R. 81 of 1890.

As to signing and countersigning the cheques, see R. 81 of 1890.

Where there is a special bank account, no application to the Board of Trade in
pespect of payment of dividends (C. No. 40, infra, Form 438) seems to be necessary.
See Reg. 11 of Jan. 1893.

The pass-book and certificate of the banker of the balance are requii-ed for audit.
See Form 213, Chap. XXIV.



{Title.)



Form 246.



We, the committee of inspection, being of opinion that Mr. , of Appheahon



, the liqr in the above matter, should have a special bank account Trade to

for the purpose of [Jiere inseri grounds of application], hby apply to authorise

the Board of Trade to authorise him to make his payments into and account.

out of the Bank. I'orm 43 of

1890.



272 WINDING-UP BY THE COURT. [ChAP. XXV.

All clieques to be countersigned by , a member of tbe committee

of inspection, and by for .

Dated this day of , 189 — .

Committee of Inspection.

The fee on this application is H. Order, 17th Dec. 1891, Appx.



Form 247.

Order of
Board of
Trade for
special bank
account.
Form 44 of
1890.



{Title.)
You are hby authorised to make your payments in the above matter

into and out of the Bank.

\_Here insert any special terms.']

All cheques to be countersigned by , a member of the com-
mittee of inspection, and by .

Dated this day of , 189 — .

To , By order of the Board of Trade.

Liquidator.

The fee on this order is 21. Order, 17th Dec. 1891, Appx. B.



Form 248.

Certificate of
banker of
balance at
special bank
account.



Re the -

- of 189-



Coy, Limtd.



Ct.



. No. ■

I, , of &c., the manager of the



■ branch of the Bank, at
which the special bank account of the liqr of the above-named coy is

kept, hby certify that there is a balance of £ standing at the sd

bank to the credit, and at the disposal, of the liqr in the above-named
matter.

Dated this day of ,189—. (Signed) A. B.



Investment
of surplus
moneys.



Sale of
Bccurities.



Dividendw.

Interest on
excess.



Investment — Dividends— Sale of Securities.

Sect. 17 of 1890. — (1) An account shall be kept by the Board of Trade of the receipts
and payments in the winding-up of each company, and when the cash balance
standing to the credit of the account of any company is in excess of the amount
which, in the opinion of the committee of inspection, is required for the time being
to answer demands in respect of that company's estate, the Board of Trade shall, on
the request of the committee, invest the amount not so required in government
securities, to be placed to the credit of the said account for the benefit of the said
company.

(2) Whenever any part of the money so invested is, in the opinion of the com-
mittee of inspection, required to answer any demands in respect of the estate of the
com2)any of the assets of which the money so invested formed part, the Board of
Trade shall, on the request of the committee, raise such sum as may be required
by tlio Hulo of such part of the said securities as may be necessary.

(3) The dividends on the investments made under this section shall be paid to the
credit of tlu! company of the assets of which the money so invested formed part.

Sect. 18 of 1890. — WLcn the balance at the credit of any company's account in
the hands of the Board of Trade exceeds two tliousand pounds, and the liqmdator
gives notice to the Board of Trade that the excess is not required for the purposes



BANKING ACCOUNT AND INVESTMENT. 273

of the liquidation, then such company shall bo entitled to interest upon such excess
at the rate of two per centum per annum.

R. 134 of 1890. — (1) Where the committee of inspection are of opinion that any part Request for
of the cash balance standing' to the credit of the account of the company should be investment
invested, they shall sign a certificate and request, and the liquidator shall transmit '^^ sale,
such certificate and request to the Board of Trade.

(2) "Wliere the committee of inspection are of opinion that it is adnsablc to sell
any of the securities in which the moneys of the company's assets are invested, they
shall sign a certificate and request to that efiPect, and the liquidator shall transmit
such certificate and request to the Board of Trade.

{Tltie.) Form 249.



We, the committee of inspection in the above matter, hhj certify Certificate

that in our opinion the cash balance standing: to the credit of the f request

■^ , , ° , b}^ committee

above-named coy is in excess of the amount which is required for the of inspection

time being to answer demands in respect of such coy's estate, and ''''S to "ivest-

request that the Board of Trade will invest the sum of £ in funds.

government securities, to be placed to the credit of the sd account for To^qi^ ^^ °^

the benefit of the sd coy.

Dated this day of • , 189—.

Committee of Inspection.



(Title.) Form 250.



We, the committee of inspection in the above matter, hby certify Request by

that a sum of £ , forming part of the assets of the above-named pommittee of

coy, has been invested in government securities, and that the sum of Board of
£ is now required to answer demands in respect of the sd coy. Trade to seU

SGCiiritiGS

And we request that so much of the sd securities as may be necessary Form 83 of
for the purpose of answering such demands may be realised by the ^^^0.
Board of Trade, and that the amount realised may be placed to the
credit of the sd coy.

Dated this day of , 189—.

Committee of Inspection.



274



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



CHAPTEE XXYI.



CARIIYING ON THE BUSINESS.



Sanction
required by-
liquidator.



Speculative
trading.



Sect. 12 (1) of 1890. — 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
inspection, carry on the business of the company.

If there is no committee of inspection, the sanction of the Court or of the official
receiver, acting imder the special dii-ections of the Board of Trade, must be obtained.
See sect. 9 (9) of 1890 ; R. 169 of 1890.

The wording of sect. 12 (1) of 1890 differs slightly from the wording of sect. 95 of
1862, which empowers the official liquidator with the sanction of the Court "to
carry on the business of the company so far as may be necessary for the beneficial
winding-vp of the same,'''' for the words in italics do not appear in sect. 12 of 1890.
It would seem, however, that some such words are implied, and that the Court
would, under sect. 12 (3) of 1890, interfere and stop the carrying on of the business,
if proof were given that the carrying on was not necessary or expedient for the
pui-poses of the winding-up.

It cannot be intended that the liquidator, even with the sanction of the committee
of in.spection, should caiTy on an unsaleable business merely on the chance that he
may make profits, and thus speculate with the assets. See Wreck Becovery Co., 15
C. Div. 353 ; Ex parte Emmanuel, 17 C D. 35 ; Ex parte Cooks, 21 C. D. 397.

But it may be very proper to carry on the business where it is considered that it
may be sold as a going concern, and that to stop it would destroy or impair its
value, and so also it may be proper to carry it on when there are pending contracts
which can be carried out without much difficulty, and if not carried out would
involve forfeitui-e or heavy claims against the company for damages. And so also
where the company has partly manufactured materials, it may be proper to carry
on the business so far as may be necessary to complete the manufacture, if by so
doing a loss wiU be avoided or a sale effected.

In such cases the circumstances must be carefully considered, and, even if the
committee of inspection give the required sanction, the liquidator should not
hesitate to apply to the Court for directions (sect. 23 (3)), where there is, or may be,
a difference of opinion. See supra, Chap. XXI.

In order to obtain the sanction of the Court under sect. 95, special reasons for
carrying on the business had to bo shown as above.

It had also to be shown that the carrying on was for the benefit of the unsecured
creditors, and would not involve an expenditure of the free assets for the benefit of
Becurcd creditors, e.g., mortgage debenture-holders.

Where liberty to carry on the business was given, it was sometimes limited as
to time, and the time could be extended. Sometimes the question whether the
busincRH should bo carried on was siibmitted to a meeting of contributories or
creditors, according as the company was solvent or insolvent.



CARKYING ON THE BUSINESS. 275

Liberty to carry on tho business was much more commonly given to provisional
liquidators than to liquidators appointed after tho winding-up order.

Sometimes liberty to carry on tho business is given by the order appointing a
provisional liquidator. See Chap. X., p. 103. And sometimes by the winding-up
order. General Service Stores, 64 L. T. 228.

But it is more usual to appoint the official receiver provisional liquidator, restrict-
ing his power to make an application for the appointment of a special manager to
carry on tho business. See Chaps. X. and XI.

The directions of the committee of inspection may always be over-ridden by the
creditors or contributories in general meeting. Sect. 23 (1) of 1890.

K. 157 of 1890. — Where tho liquidator can-ies on the business of the company, he Liquidator
shall not, without the express sanction of the Court, purchase goods for the carry- not to profit,
ing on of such business from any person whose connection with the liquidator is of
such a nature as would result in the liquidator obtaining any portion of the profit
(if any) arising out of the transaction.

A member of the committee of inspection is also forbidden to receive without
the Court's sanction payment out of the assets "for any goods supplied by him to
the liquidator for or on account of the company," and any such payment by him
may be disallowed by the Board of Trade on the audit of the liquidator's accounts.
See E. 158 of 1890.

R. 159 of 1890. — In any case in which the sanction of the Court is obtaiaed Cost of
under the two last preceding i-ules, the cost of obtaining such sanction shaU be sanction,
borne by the person in whose interest such sanction is obtained, and shall not be
payable out of the company's assets.

As to the liquidator being forbidden, except by leave of the Court, to purchase
assets of the company, see R. 156 of 1890.

Where the liquidator carries on the business, he must keep a distinct account of -Accounts,
the trading, which must be verified and submitted to and audited by the committee
of inspection, or, if there is no such committee, by the ofiicial receiver, in the
manner pointed out in Chap. XXIV.

As to obtaining leave to open a special banking account, see Forms 202, 246.

As to the liquidator's habUity for servants' thefts, see Jobsoyi v. Palmer, (1893)
1 Ch. 71.

Let all parties concerned attend, (tc, on the hearing of an apx^licon Form 251.
of the [off recr and] liqr of the ahove-named coy that the applicant Summons for
may be at liberty to carry on the business of the sd coy for the space "berty to

of calendar months from the date of the order to be made hereon, business.

so far as may be necessary to complete contracts already made by the
sd coy, and to undertake contracts to an extent not exceeding what may
be necessary to sell the land, buildings, and business of the sd coy as a
going concern [or as the case may be'], or for such other period and for



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