Francis Beaufort Palmer.

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

. (page 83 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 83 of 134)
Font size
QR-code for this ebook


winding-up of the coy, Order that S. and C. do, on or before 30th Order that
April, 1884, or subsequently within seven daj's after service of this ex-liqui
order, leave in the chambers of the judge a full, true, and particular
account, duly verified by afft, of all moneys, securities for moneys,
assets, and effects of the sd coy received by, or allowed to, and to come
to the hands of S. and C, or either of them, or of the hands of any
other person or persons by their or either of their order, or by their
or either of their use, or of all payments made by them or on account
or in respect of the sd coy from 19th Jan. 1881, the date of their
appointment as liquidators of the sd coy ; And order that the sd S.
and C. do pay to the apjilicant, as liqr of the sd coy, the amount which
shall be certified to be due from them in taking such account within
ten days after the date of the chief clerk's certificate allowing such
account. Westminster Hotel, Chitty, J., 3rd April, 1884. B. 440.



Remuneration of Liquidators.

By sect. 133 (3) of 1862, " the company in general meeting' may fix the remunera-
tion to be paid to " the liquidator or liquidators. And, by sect. 144 the remunera-
tion is included among the costs, &c., "payable out of the assets of the company in
priority to all other claims." Sometimes the remuneration is fixed at the meeting
at which the liquidator is appointed ; and there are advantages in fixing the remu-
neration upon the appointment of the liquidators, because their rights are thereby
clearly determined ; but it must be borne in mind that if a high rate is fixed in the
case of an insolvent company, creditors will have cause to complain. Examples of
resolutions so passed are given below. More commonly nothing is said about remu-
neration at the first meeting, and the liquidator has it fixed at some subsequent
meeting or by the Court.

By the joint effect of sects. 93 and 138 of 1862, the Court, if ajiplied to, can fix
the remuneration of the liquidator, and applications for this purpose are not uncom-
mon. All questions as to the propriety of the amount are thereby avoided, and in
the case of an insolvent company this course seems peculiarly desirable.

The tendency of the Court is to give remuneration on the footing of the scale in
the Order of 17th Dec. 1891. See Appendix B.

Not uncommonly the liquidator takes such remuneration as he considers expedient,
and then at the final meeting the accounts are passed, including the appropriation
of this remuneration.



That the remuneration of the sd liqr for his services in the winding- Form 715.

up be fixed at the sum of flOO/.l. 7^ TT

^ L J ^ Kesolutions

Or at the sum of 1, p. a., or at the sum of [two] guineas per day as to re-

of eight hours for his own time and one guinea per day of eight hours m^eration of
for his clerk's time, or at a sum equal to two p.e. of the amount of the
assets divided among the unsecured creditors and members of the coy.

That the remuneration of the sd liqrs be fixed at two guineas each
for every day occupied by them in the winding-up, together with all



630



VOLUNTARY WINDING-UP.



costs, charges, and expenses incurred by tliem in and about sucli
winding-up.

That the liqr shall be remunerated for the service of himself and his
clerks in accordance with the scale usually adopted by the High Ct of
Justice in fixing the remuneration of off liqrs.



Form 716.

Order as to

remnneration
of liq^uidator.



Upon the peton of H., of, &c., and J., of, &c., preferred unto this
Ct, and upon hearing counsel for the petrs and for the respts, and
u-poTL reading the sd peton, By consent, order that, without preju-
dice to any question, it be referred to chambers to fix the amount of
remuneration proper to be allowed and pd to S., C, and H., the present
liqrs of the sd coy ; And order that it be referred to the taxing master
to tax the bill of costs of Messrs. L. & L., the solors of the respts,
delivered to the sd liqrs, of and relating to the winding-up of the sd
coy. And order that the rest of the sd peton do stand over. London
Paper, ^c. Co., Malins, V.-C, 1st Feb., 1878. B. 311.



Form 717.

Order fixing
remuneratioii
of liquidator.



Upon the applicon of W. and 0., two of the voluntary liqrs of the
coy, and upon the applicon of N., the other liqr. Order that the sum
of 9oOZ. be allowed as the total amount of the remuneration to be pd
out of the assets of the coy to the sd N. as one of the voluntary liqrs
of the coy, in respect of his services up to the close of the liquidation,
and tax as between solor and client the costs of the sd W. and C, and
also the costs of the sd N., of the sd applicon and consent thereon, and
order payment out of assets. Nortlijleet Chalk, Kay, J., ii4th April,
1884. B. 503.



Form 718.

Order as to
liquidator's
remuneration
up to close of
liquidation.



Ujion the applicon of T. & N., the voluntary liqrs of the above-
named coy, &c., by originating summons, It is ordered that the sum of
500Z. be allowed as the total amount of remuneration to be pd out of
the assets of the coy to the sd T., and the sum of 300^. allowed as the
total amount of the remuneration to be pd out of the assets of the coy
to the sd N. as the voluntary liqrs of the sd coy in respect of their
services up to the close of the liquidation. And it is ordered that the
sd sums of 500/. and 300/. resply be pd to the sd T. & N. resply out of
the assets of the sd coy. And it is ordered that 10/. 19*. 6f/., the
ascertained costs of the applicants, and 21. 2s., the ascertained costs of
the sd New Explosives Coy, Limtd, of this applicon, be pd out of the
assets of the sd coy. Explosives Co. (1891, E. 916), Kekewich, J.,
28th Aug., 1891. A. 1264.



Possession of Books and Assets.

ITow posses- The liquidator should at once take possession of tlie books, deeds, and documents
Bion taken. of the company ; and ascertain by inquiiy the •whereabouts of any which are



POSSESSION OF BOOKS AND ASSETS. 631

missing, and apjily for tlio tielivory thereof. He .should also with all convenient
speed obtain jjossession of the assets of the company, — e.g., of land, buildings,
stock-in-trade, rolling stock, plant, machinery, bonds, and securities, — so far as
practicable or expedient, bearing in miud that there are some assets of which physical
possession cannot be obtained : e. g., book debts owing to the company (notice, how-
ever, of the winding-up should be given to the debtors) ; property of the company
in possession of mortgagees or a receiver (but notice of the liquidation shovild be
given to the mortgagees or receiver).

Some of the forms of notice in use by the official receiver, when acting as provi- Use of official
sional liquidator, after a winding-up order, may bo adojited, with the necessary ^^^eiver s
vai'iations.

Where a solicitor or other person is in possession of books or documents, and Books, &c.,
claims a lien or charge thereon for money due, the validity of the lien or charge pyhject to
should at once be examined into, and if it appears that the lien or charge is valid
and effective, and the books or documents are wanted, an arrangement should be
made to obtain delivery on some reasonable terms — e.g., that the amount of the lien
or charge shall be paid off out of the first available assets coming into the hands of
the liquidator. The liqiudator may, however, consider it expedient to raise the
requisite funds and discharge the lien. If the lien is by a solicitor, for a bill of
costs, he should be required to send in such bill, and it may be expedient to have it
taxed, and in some cases it may be desii-ablo to obtain delivery before taxation.
This can generally be obtained if the liquidator is prepared to pay the amount
claimed into Court.

There are some books and documents upon which the company cannot give a lien Books exempt
or charge — e.g., the register of members, the register of mortgages, and any docu- from lien,
ments which the regulations expressly provide are to be kept at the office of the
company [Capital Fire, 24 C.^Div. 408 ; Anglo- Maltese, 33 "W. R. 652 ; see Section I.,
Chap. XXVII.) ; where a lien is claimed on such books the liquidator should press
for delivery.

Where the lien or charge claimed appears to be invalid or questionable, it will be Testing" lien,
for the liquidator to take steps to test the right claimed. Sometimes it may be "nase
to offer to pay money to a joint account pending the adjudication of the dispute,
and to ask the person who claims the lien or charge to hand over the documents or
property on that footing.

Under sect. 138 of 1862, where the books or assets are in the possession of a con- Order against
tributory, trustee, receiver, banker, or agent or officer of the company, the liqui- officers, &:c.
dator may apply to the Court for an order, under sect. 100 of 1862, to deliver up
the same.

As to sect. 100, see Section I., Chaj). XXVII. As to sect. 138, see infra.

When the company holds leaseholds and is insolvent, and its interest in the lease- Leaseholds.
holds is worthless, by reason of their being held at a very hig-h rent, or being subject
to onerous covenants or heavy mortgages, there is danger in taking possession,
because the landlord may become entitled to claim payment in full for rent accrued
during the liquidation, whilst the liquidator may derive little or no benefit from
keeping on the premises. Whereas, if the liquidator does not take possession and
does not keep on the premises for the pui'poses of the liquidation, the landlord can
only prove for rent from time to time as it falls due, and take liis dividend pari passu
with other creditors. If the company's assets are sufficient to pay the costs of
"winding-up and all the creditors, and to leave something for the shareholders —
then the shareholders can get nothing until the landlords are properly pro^'ided for.
See further Chap. XXXV.



G33



VOLUNT/VllY WINDING-UP.



Differences
from practice
under compul-
sory order.



Costs.



Secured
creditors.



Restraining and Staying Actions, &c.

See Section I., Chaps. XXXIII.— XXXV.

Where a compulsory or supervision order has been made, no action or proceeding
can be proceeded with or commenced against the company except with the leave of
the Court. See sect. 87 of 1862. But this section does not apply to a purely
voluntary winding-up.

However, it was settled before the Judicature Act, 1873, that in a voluntary
winding-up the Com-t would in general, under sects. 8o and 138 of 1862 (see as to
sect. 138 the notes beneath Form 719), restrain actions and proceedings against
the company, the plaintiff being permitted to add his costs to his debt and prove
for the amount. Foole Firebrick Co., 17 Eq. 268. And the Judicature Act has not
altered the practice, except that where the action is pending in the High Court, the
application must be to stay further proceedings, and should be made to the Division
in which the action or proceeding is pending. See Chap. XXXIII. Walker v.
Banagher Distillery Co., 1 Q. B. D. 129 ; Rose v. Garddcn Lodge Co., 3 Q. B. D. 235 ;
Artistic Colour Co., 14 C. D. 502. With the exception aforesaid the application to
restrain should be made to the winding-up judge by motion on notice, see supra,
Form 356.

The costs of proceedings commenced before winding-up can only be proved for :
Snyder Dynamite Co., W. N. (1893) 37.

Where the plaintiff has notice of the voluntary winding-up, and proceeds after an
offer to allow him to prove for his debt and costs (which offer should always be
made as soon as it is ascertained there is an action pending) , the Court in staying
the action may decline to allow him to add to his debt the costs of appearing upon
the application to stay. Itose v. Gardden Lodge Co., ubi supra.

And where the action is brought after notice of the winding-up, the plaintiff,
except in special circumstances, will not be allowed to add the costs to his debt, and
may be ordered to pay the costs of the action and of the application to restrain or
stay. East IZcnt Shipping Co., 18 L. T. 748.

See also Thurso Gas Co., 42 C. D. 486, where a creditor in Scotland was restrained ;
and it was held that he could only add his costs to his debt. And Westbury v.
Ttrigg ^- Co., (1892) 1 Q. B. 77, where sale under an execution was restrained.

In a voluntary, as in a compulsory, winding-up, certain actions and proceedings
{e.g., a foreclosure action) wiU be allowed to go on, see Section I., Chap. XXXIV.



Form 719. On tlie hearing of an applicon on tlie part of A. B., tlie liqr acting

I '^ T in the voluntary -winding-up of the above-named coy, that , of

voluntary , may he restrained from further proceeding with an action

liquidator for i^^ought by him in the County Ct of , holden at , against the

order restrain- o ./ j ? ) &

ing action sd coy, and that he may be ordered to pay the applicant's costs of and
incident to this applicon.



against
company



Form 720. ^- '^^^ above-named coy, hnftr called "the coy," was on the



Affidavit
Hupporting
above
Hummous.



day of incorj)orated under the Cos Acts, 1862 to 1867, as a coy

limtd by shares with a capital of 30,000/., divided into 3,000 shares
of lOZ. each, and tlio paid up capital of the coy exceeds 20,000/.

2. The registered office of the coy is situate at .

3. On the day of an extraordinary resolution of the coy



CREDITORS. 633

was duly j)asse(l to the effect " that it has been proved to tlio satis-
faction of this meeting that this coy is unable, by reason of its
liabilities, to continue its business, and that it is advisable to wind up
the same, and accordingly that this coy be wound up voluntarily, and

that A. B., of (this dej)onent), be appointed liqr for the purposes

of such winding-up." The minute book of the coy kept pursuant to

sect. 57 of the Cos Act, 1862, is now exhibited to me marked .

4. I accepted office as liqr of the coy, and on the day of



the sd resolution was duly advertised in the London Gazette as required
by sect. 132 of tlie Cos Act.

5. Prior to the passing of the sd resolution A. B., of , com-
menced an action against the coy in the County Court of . holden

at , for the recovery of the sum of /. alleged to be due to him

from the coy for goods sold and delivered, but immediately after the pass-
ing of the sd special resolution, I wrote and sent to the sd A. B. a letter
calling his attention to the resolution and requesting him to proceed no
further with the action, and requesting him to come in and prove his
claim in the winding-up, and mentioning the insolvency of the coy.

The document now exhibited to me marked , is a precise copy of

my letter to the sd A. B.

6. In reply to my sd letter, I received on the day of a

letter from the sd A. B. now exhibited to me marked , stating

that he wanted the money and that he should proceed with his action,
and that he advised me strongly to pay up and save expense.

7. The debts and liabilities of the coy, so far as ascertained,
exceed /., and the assets do not exceed in value 1., or there-
abouts, accordingly the coy is insolvent.

8. The continuance of the sd action is wholly unnecessary, and
would involve expense and delay, and I submit that it ought to be
restrained.

Formal parts : see supra^ Form 9. Form 721.

on the part of , of , the liqr acting in the voluntary winding- "T";

up of the above-named co}', that , of , may be restrained motion to

from further proceeding with the distress levied by him on the goods restrain
of the sd coy, and from levying any other distress on the goods of the
sd coy in respect of any rent which accrued due to him from the sd

coy before the day of . And that the sd may be

ordered to pay the costs of this applicon.

See further. Section I., Chap. XXXV.

Creditors.

The liquidators are appointed " for the piu-pose of winding' up the affairs of the
company and distributing the property" (sect. 133 (2) of 1862), and "shall pay
the debts of the company." Sect. 133 (10).



634 VOLUNTARY WINDING-UP.

By sect. 133 (1), " The property of the company shall bo applied in satisfaction
of its liahHities pari passu," and it is only " subject thereto " that any distribution
takes place among the members.

"Where property of the company is subject to debentures, mortgages, or other
incumbrances, the liquidator should be cautious before he takes any steps towards
taking possession of or dealing with such property, for if he lays out money on
mortgaged property, he does so for the benefit of the mortgagees, and accordingly,
until they have been paid off he cannot get anything from the property. It is
therefore improper to expend any free assets on mortgaged property, unless the
liquidator is satisfied that there is an assured margin of secui-ity beyond the claim
of the mortgagee.

Incumbrancers very commonly take proceedings and get a receiver appointed.
The liquidator should be advised where any such proceedings are taken, and he
may be able to secure the office for himself, and thus be in a position the better to
protect the assets.

As regards the limited priority allowed to rates and taxes, see the Preferential
Payments in Bankruptcy Act, 1888, and Section I., Chap. XXXVII. Any sums
due in respect thereof which are not accorded the priority above mentioned mvist
be proved for, and any incurred in the course of the winding-up must be proved
for unless the liquidator has kept on the property for the benefit of the liquidation.
In such case they may have to be paid in full.

As to landlords, see Chap. XXXV.

The liquidator soon after his appointment should by advertisement call on the
creditors of the company to send in particiilars of their debts and claims, and if so
required to come in and prove. See Form 722. It is doubtful whether the
liquidator can act on the concluding statement therein, and disregard debts and
claims, of which he has notice, but which are not proved within the time specified.

The Court has, however, power (sect. 107) to fix a time within which the
creditors of the company are to prove their debts and claims, or to be excluded
from the benefit of any distribution made before such debts and claims are proved.
And upon the application of the liquidator in a voluntary winding-up, the Coiirt
. (under sects. 107, 138) has sometimes made an order in exercise of the power. See
Form 731 ; but see note to Form 722. It is for the liquidator to decide whether
it is expedient to apply for such an order. It may be desirable to apply (1) where
there are a number of creditors abroad, or (2) where there are a number of creditors
who do not come in and prove, and in other cases too numerous to mention.



Form 722. ^^ t^e Matter, &c.

zz : Notice is hby given tliat tlie creditors of tlie above-named coy are

creditors. required, on or before the day of , to send their names and

addresses, and the particidars of their debts or claims, and the names

and addresses of their solors, if any, to A., of •, the liqr of the sd

coy, and, if so required, by notice in writing from the sd liqr, are by
their solors to come in and prove their sd debts or claims at such time
and place as shall be specified in such notice, or in default thof they
will bo excluded from the benefit of any distribution made before such
debts are proved.

Dated tliis day of .

B., of , Solor to the above-named Liqr.

Sometimes the notice is signed by the liquidator instead of his solicitor, and in such



\



CREDITORS. 635

case the •word " unclersigned " ■will be inserted in the notice before the name of the
liquidator, and the signature modified accordingly. The notice should be adver-
tised two or three times in newspapers circulating in the district where the com-
pany's office is situate, and in the Gazette, and where there are foreign creditors it
is desirable to advertise it abroad.

The Court generally allows about six weeks, and a voluntary liquidator should,
except in special cases, allow the same. As regards creditors abroad, a longer
period is sometimes allowed.

When the advertisement is issued pursuant to an order of the Court, Form 780,
and not this fonn, should be used.



Upon the applicon Ijy originating summons, dated 12tli Feb. 1892, Form 723.
of W. M., of &c., the liqr of the above-named coy, and upon hearing o de fi i sr
the solors for the applicant, and upon reading the ailt of the sd W. M., time for
filed the 17th of March, 1892, and the exhibits therein referred to, It P^^-i^g /^ebts

' ' _ ' (English and

is ordered that the 30th of April, 1892, be fixed as the day on or before foreign

which all persons claiming to be creditors of the sd coy residing or creditors),
carrying on business in the United Kingdom of Grreat Britain or Ire-
land, and that the 16th of June, 1892, be fixed as the day on or before
which all persons claiming to be creditors of the above-named coy, and
residing or carrying on business in California or elsewhere out of the
United Kingdom of Great Britain and Ireland, are resply to send in
their names and addresses and the particulars of their debts or claims,
and the names and addresses of their solors (if any), to the sd W. M.,
as the liqr of the sd coy, and that, if so required by notice in writing
from the sd liqr or his solors, such persons claiming as afsd do come in
and prove their sd debts or claims at such time and ]jlace as shall be
specified in such notice, provided that any such persons resident out of
the United Kingdom as afsd are to have not less than two calendar
months after the despatch of such notice as afsd within which to prove
their debts or claims. And that in default thereof such creditors be
excluded from the benefit of any distribution of the assets of the sd
coy \jnsert " made before such debts are proved "]. And it is ordered
that advertisement for such creditors be settled by the judge. And
that advertisements in relation to such claims as afsd, when settled by
the judge, be inserted in the following newspapers, that is to say,
once in each of the following newspapers, that is to saj', the London
Gazette, the Times, the Standard, and the San Francisco Chronicle.
And it is ordered that the costs of this applicon be costs in the
winding-up of the sd coy, and that any person interested be at
liberty to apply as he or she may be advised. Mexican English
Syndicate, Ld., (1892) M. 454, Stirling, J., 18th March, 1892. B. 325.

The Act of 1862 does not give to a liquidator expressly any power to fix a day on
or before which creditors are to prove. Hence it is not uncommon to apply to the
Court under sects. 138 and 107 to fix a day as above. Where such an order is
obtained there will be no certificate by the registrar, and any disputed claims vrill



636



VOLUNTARY WINDING-UP.



Form 724.

List of debts
and claims.



have to be dealt witb by subsequent applications. Form 728. In some cases it is
convenient to take an inquiry as to the debts, as in Forms 729, 730. In that case
the registrar adjudicates and certifies.

In tlie Matter of the Cos Act, 1862,
and

In the Matter of The Coy, Limtd.

List of debts and claims of which the particulars have been sent in
to the liqr, or of which he is otherwise cognisant.

A. B., Liqr.



First Part. — Debts and claims which seem proper to be allowed
without further evidence.



Serial
No.


Names of
Creditors.


Addresses
and Descrip-
tions.


Particulars

of Debt or

Claim.


Amount
claimed.


Amount

proper

to be

allowed.


Reasons for belief

that amounts

are proper to be

allowed.










£ s. d.


£ s. d.





In the seventh column insert reasons, e.g., " the company's books and papers."
If any of the debts and claims proposed to be inserted in the first part of the list
carry interest, it is desirable to subdivide the first part, and intitule one part, " First
Part. — Debts and claims carrying interest proper," &c. ; and the other, "Second
Part. — Debts and claims not carrying interest proper," &c. The second part below
vein then be intituled the third part. The division of the debts into those which
carry and those which do not carry interest has to be done at some time [see Form
732], and the sooner it is done the better. By doing it at once the preparation of
Form 732 is facilitated.

The names of the creditors in each part should be arranged strictly in alphabetical
order, in accordance with their surnames, and the serial numbers originally fixed
should be adhered to in all subsequent proceedings. Unless this is done great



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 83 of 134)