Charles Mac Naughten Sir Francis Beaufort Palmer.

Company precedents for use in relation to companies: subject to ..., Volume 2 online

. (page 33 of 152)
Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 33 of 152)
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STATEMENT OF AFFAIRS AND PRELIMINARY REPORT.



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218



WINDING-UP BY THE COUBT.



[Chap. XVI.



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STATEMENT OF AFFAIRS AND PBELIMINABY KEPORT.



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220



WINDING-DP BT THE COURT.



[Chap. XVI.



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STATEMENT OF AFFAIRS AND PBELIMINABT EEPOBT.



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222



WINDING-Ul' BV THE COUKT.



[Chap. XV 1.



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STATEMENT OF AFFAIBS AND PBELIMINABT BEPOBT.



223



LWf " P." — ^IW SUBSnTDTIOir fob SUCJH of the LiETTS HAICED " A " TO ** O "
▲8 WILL HAYB TO BB BBTUBITBD BLAKX.



LlBT.



Passioulabs, aa per front sheet.



Bexabes.

Where no particulars are entered on
any ont or more of the Lists named
**A*' to •• O " the word ** Nil "
should be inserted in this column
opposite the particular List or Lists
thus left blank.



A
B

C
D

E
F

a

H

I
J

E
L
M

N




Unaeonred Creditors

Creditors f ally oeoored (not including deben-
ture holders) • •

Creditors partlj seonred

Liabilities on Bills disooonted other than the
Company's own aooeptanoes for yalae . . . .

Other liabilities

Preferential Creditors for rates, taxes,
wages, &c

Loans on Debenture Bonds

Property

Book Debts

Bills of Exchange or other similar securities
on hand

Unpaid Calls

Founders' Shares

Ordinary Shares

Preference Shares

Deficiency Account



Signature —
Dated-



19—.



{Title.)



Form 150.



I, A. B., of, &c. [or We, C. D., of, &c., andE. F., of, &c.], do hereby Affidavit of
make oath and say as follows : — concurrence

That I [or " We "] have perused the statement of aflFairs lodged ^ ^^^*

herein by , and that to the best of my [or ** our"] information,

knowledge and belief, such statement contains a full and accurate
account of the company's affairs [except paragraph 3, or as the case
may be].

Sworn at — — , in the of , ) ^.

this — day of , 190-. } Signature of deponent.

Before me a Oommissioner of Oaths.

The statement of affairs is yerified by the person or persons actually making it
swearing the short afftdayit at the foot thereof, which forms part of Form 149, tupra.

Summary of Statement of Affairs.

The official receiyer must also prepare ''a summary of the company's statement
of affairs, including the causes of its failure, and any observations thereon which
the official reoeiyer may think fit to make," for transmission to the creditors and
contributoriee— if possible before the first meetings. See Sched. I., B. 3, to Act of
1890, and tfi/ra, Chap. XVII.



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224



WINDINU-UP BY THE COURT.



[Chap. XVI.



Form 161. '^^ following is an example of a summary of the statement of affairs sent hy the

official receiver to the creditors and oontribntoiiee ; but the summaries, especially

-"^'^"'^^'^ ^ after 1903, will, of course, differ widely according to the oiroumstanoes.

•*^^- {Full title and reference to record.)

8UMMAET OF the Statement of Affaibs bttbiottbd by the

SeOBETABT and DntEOTOBS

On the day of , 190— [the date of the Winding-up Order'].

(I.) As regards Creditors.



QroM
liabiUties.



liabilities.



Unsecured creditors (94)

Other UabiHties (2) . . .
(See Observations.)

Loans on deben-
ture bonds (8)
deducted contra £



Preferential cre-
ditors (8) for
rates, taxes,
wages, &c., de-
ducted contra ..£



Expected
to rank.



£ «. d.



Assets.



Cash in hand . .
Stock-in-trade



ErtiniAted
to prodnoe



£ «. d.



Other property

(See Observations.)

Book debts, viz. : —

Good

Doubtful £

Bad

£



Estimated to produce . . .

Bills of exchange on hand

Estimated total assets



Deduct loans on debenture bonds secured
on the assets of the company as per
contra



Estimated net assets

Deduct pref erentialoreditors as per contra

Estimated amount available to meet un-
secured creditors, subject to cost of
liquidation



Estimated deficiency of assets to meet
liabilities of the company, subject to
costs of liquidation

£



There is no unpaid capital liable to be called up to meet the above defioienoy.

(11.) As regards Contribiitories.



Capital issued and allotted, viz. : —

Ordinary Shares of L per Share,

of which were issued as fully paid

to the Vendors

(12 Shareholders.)
(£10,000 Sharei ranoelled. Bee ObeervationB.)

Add deficiency to meet liabilities as above . .

£




£ 9. d.



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STATEMENT OP AFFAIRS AND PRELIMINARY REPORT. 225



OfiSBBVATIOirS.

The winding-np order was made on the peton of Mr. X., presented
on the , &o.

Mr. X. was the principal vendor to the ooy, and subsequently,
either as *^ governing " or ^* managing" director, has had the principal
control of the coy's affairs throughout. He is now both a creditor
and a shareholder.

The statement of affairs, which should have been lodged, under a

certificate extending the statutory period, not later than the ,

19 — , was not filed until the , 19 — ; an applioon by the off recr

to the Ot to enforce its submission was made on the , 19 — . The

statement is submitted by Mr. A., the secretary of the coy, Mr. X.
above mentd, and Mr. W., another director.

The coy was registered on the, &c., and was formed for the purpose

of acquiring and carrying on the business of a manufacturer,

which had been, very shortly before, established by Mr. X. in , in

conjunction with one P.

The business was taken over as from, &c., and has since been
carried on at (the registered offices), and at .

The promoters of the coy were Mr. X. and Mr. D. The coy under-
took to pay the expenses of promotion.

The ppty acquired by the coy consisted of a lease of the premises,

buildings, plant, machinery, stock, &c., which were valued at /.,

and certain patents which were valued at /. Mr. X. has been

asked to furnish a statement showing what had actually been expended
upon the ppties up to that time, but has not yet done so.

The purchase price was fixed at the amount of the valuations, viz.,

/., and was satisfied as to /. in debentures, and as to /.

in fully paid shares.

The whole of the debentures and shares issued in satisfaction of the
purchase-money were handed to Mr. X., with the exception of 500

folly pd shares, representing /., which were given to Mr. D., in

satisfaction of his interest.

Subsequently, in , 19 — , the patents, which were included at

the sum of /., having been ascertained to be of no value, Mr. X.

and Mr. P. each returned to the coy i. in shares which had been

allotted to them ; but the necessary entries to give effect to this sur-
render have not yet been made in the register of members, and the

/. shares in question are also included in the present statement of

affairs.

Particulars will be found in the following schedule as to the persons
who have constituted the directorate of the coy, with some particulars
as to their shareholding, &c. [^here follows a table].

Mr. W. has also acted as solor for the coy and for Mr. X.

P. Q



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226 WINDING-UP BY THE CX)URT. [ChAP. XVI.

The qualification for directorship is the holding of shares of the
nominal value of /.

It will be obserred that Mr. W. does not h(dd the> necessary qaali-
fying shares, although Mr. X. states that he transferred certain shares
to him some time ago. No transfer has been registered.

The first secretary of the coy was Mr. F. On his retirement Mr. A.
was appointed secretary, and continued to hold that office until the
date of the winding-up order.

The nominal capital of the coy is /., divided into ordinaiy

shares of /. each. The first allotment appears to have taken place

on the , when seven shares ( /.) were issued to the signatories

to the memdum and arts of asson. On the , shares ( /.)

were issued as fully pd to the vendors, fifty shares ( 1.) for cash to

a director, and one share ( /.) for cash to another person. On the

, 19 — , twenty shares ( /.) were issued to another subscriber

for cash, and no further issues have been made. The total issue thus
amounts to /.

No shares have been in the ordinary sense issued to the public, nor
do the public appear to have been actually invited to subscribe for
shares.

In addition to the /. debentures issued to the vendor /. had

been issued to the public, full cash conson being received in most

cases ; /. appears to have been pd as commission on obtaining

certain subscriptions.

The debentures were ofiPered to the public by means of a prospectus,
and appear to cover all the assets of the coy.

The /. held by Mr. X. have been charged by him to his

bankers for about /., and to another person for about L ; the

unissued debentures of the coy amounting to L have also been

placed in the hands of Mr. X.'s bankers for protection against issue to
other persons. The bank recently oonmienced a debenture action for

the protection of their interests, with the result that on the , 19 — ,

Mr. M., of 1 was appointed recr and manager on behalf of the

debenture holders, and immediately took possession of the assets,
which are being duly administered by him. The off recr is being
represented in the debenture action, and active steps are now being
taken with a view to effecting a sale of the ppty. It is impossible at
the present time to state what is likely to be the ultimate result, but
hopes are entertained by the officers of the coy that a sufficient sum
will be realized to leave a surplus available for division amongst the
unsecured creditors.

The available working capital possessed by the coy at the date of

commencing business appears to have been about /., a sum which

was obviously insufficient.

The insolvency of the coy is attributed generally to the want of



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STATEMENT OF AFFAIBS AND PKEUMINABY REPORT. 227

capital and to presBure by trade creditors ; but the off recr is inclined
to think that there has also been some laxity in the management of
the business. Some of the items of expenditure {e.g., '' salaries and
wages ") appear to be exceptionally heavy for the extent of the coy's
business.

The defidenoj is explained in an account of which the following is
a Bunimary i-^—

Gross profit arising from oarrying on business from

date of formation of company to date of Winding-

np Order (estimated to balance) £

Cash receiyed for damage by fire from yarions

oompanies with whcmi assorances were effected

(Noyember, 1894)

Deficiency as per statement of affairs

Total amount to be accounted for £

Expenses of carrying on business from date of
formation to date of Winding-up Order, yi2. : —

Salaries and wages, including directors' remune-
ration

Rent, rates, and taxes

Interest on loans

Miscellaneous expenses, including commissions,
yaluation charges, carriage, adyertising, legal
expenses, stationery, trayeOing, insurance, &o.

£

Bad debts

Difference between the yalue of assets, as ap-
pearing in the books and as now estimated for
realization : —

Buildings, Kant, Tools, UtensilB, &o £

Patents



ABaboye • £



The books of account (apart from one or two imperfections in detail)
appear to be of the usual and proper character, and the recr and
manager for debenture holders has given the off recr all reasonable
facilities for their inspection, but as some of the books have been in

more or less constant requisition at the works in it may be stated

that the off recr's examination of them has up to the present time been
somewhat limtd.

There are creditors, shareholders, and debtors.

The unsecured indebtedness includes /. owing to Mr. W., and

/. to Mr. X. for money advanced. The indebtedness to Mr. X.

represents the sums borrowed by him from his bankers on the security
of his debentures and advanced by him in turn to the coy.

q2



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228 WINDING-UP BY THE COURT. [ChAP. XVI.

The '* other Kabilities " (not exi)ected to rank for dividend) are in
respect of damages for breach of contract in two instances.

The ''other property" includes the buildings, engines, boiler,

shafting, machinery, tools, &c., at the works in ; and the sum of

/. is stated to have been inserted in the statement of affairs as

their value after consultation with independent persons competent to

give an opinion. /. represents the estimated value of the ppty, if

sold as a going concern ; if sold at a break-up price, it is estimated

that not less than 1, would be realized. The di£l!erence between

the present estimated values and those fixed when the business was
acquired by the coy will be noted.

The Eailway Coy have in contemplation an extension of their

line, which may materially affect the ppty of the coy. A bill has been
drawn, and will, in all probability, in due course, come before Parlia-
ment; but meantime steps are being taken to protect the coy's
interests.

The patents acquired from the vendors are still held by the coy, but
as previously mentd they are reputed to be of no value.

The first meetings of creditors and shareholders were held at ,

on , 190 — ; the meeting in the latter case being adjourned to

, 190 — ; in the result the off recr was continued in office as liqr

with a committee of inspection consisting of the following persons : —
Messrs. &c. — all being creditors of the coy. These appointments have
since been confirmed by the Ct.

The off recr is of opinion that there are no facts in the case which
will make it necessary for him to apply for an order for the public
examination of parties.

G. 8. B.,

(Date.) Of Reer and Liqr.

[Note. — The sale of the coy's effects wiU take place at , on

iiie , 190 — . Particulars of sale will be forwarded in due course

to the principal creditors, and to any other persons interested who will
make applicon to the off recr.]



Preliminary Beport.

Form 152. {Full Title and Reference to Record.)

^^^i*^*^ The off recr in pursuance of sub-sect. 1, sect. 8, of the Cos
(Winding-up) Act, 1890, reports to the Ct as follows : —

Capital. — The capital of the coy is /., divided into 8 p.c.

preference shares, and ordinary shares, all of 1/. each.

Subscribed Capital. — The subscribed capital amounts to /., being

ordinary shares of 1/. per share held by twenty-seven shareholders,



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STATEMENT OP AFFAIRS AND PRELIMINAEY BEPORT. 229

and preference sharee of 1/. each held by shareholders.

The whole of the subscribed capital has been called up.

Paid-up Capital, — The capital pd up and considered as pd up
amounts to /.

Assets, — The total assets of the coy amount, according to the yalua-

. tion of the officials of the coy in the statement of affairs, to /., and

consist of furniture, plant, machinery, and book debts.

Unsecured Creditors, — The amount of the coy's indebtedness, accord-
ing to the statement of affairs, is /.

Causes of Failure, — The failure and insolvency of the coy are
attributed by its officials to the following causes : — Want of working
capital ; the falling off in speculative business and declining receipts ;
the markets going against the business, and the absence of the
managing director, Mr. X., who really worked the business.

No further Inquiry, — ^The off recr is of opinion that no further
inquiry is desirable into matters connected with the promotion and
formation of the coy and conduct of its business.

[This clause wiU he varied when it is probable that an inquiry will
be necessary,']

Dated this day of , 190—. S., Of Recr.

Sect. 8 (1) of 1890. — ^Where the Court has made an order for winding-up a
eompany, the official receiver shall, as soon as practicable after receipt of the state-
ment of the company's affairs, sabmit a preliminary report to the Court : —

(a) As to the amount of capital issued, subscribed, and paid up, and the estimated

amount of assets and liabilities ; and

(b) If the company has failed, as to the causes of the failure ; and

(c) Whether, in his opinion, further inquiry is desirable as to any matter relating

to the promotion, formation or failure of the company, or the conduct of
the business thereof.

For the rest of the section, as to public examination, see Chap. XTiTTT.

An order for public examination cannot be made on the preliminary report ; it is
made on the further report under sect. 8 (2). Cheat Kruger Co,,, (1892) 3 Ch. 307 ;
Ex parte Barnes, (1896) A. C. 146 ; Civil, ^, Outfitters, (1899) 1 Ch. 215.

E. 68 of 1908. — A report made by the official receiyer pursuant to sect. 8 of the
Act of 1890 shall state in a narratiye form the facts and matters which the official
receiTer desires to bring to the notice of the Court, and his opinion as required by
the said section. [Formerlj B. 69 of 1890.]

It is not the practice to apply for a day for consideration of the preliminary
report, or to attend the consideration of any report under Br. 63 and 64 of 1903,
except a further report preliminary to a public examination, as to which see
Ghap. XLm.



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230



WINDING-XJP BY THE COURT. [ChAP. XVll.



CHAPTER XVn.



FIRST MEETINGS OF CREDITORS AND CONTRIBUTORIES.



First
meetings.



Orders
thereon.



Effect of no
order.



Time for
holding first
meeting.



How sum-
moned.



It is not now necessary, as until 1895 it was, to delay the holding of the first
meetings until the statement of affairs has been submitted to the ofiBcial receiver.

Beet 6 of 1890.— (1.) When the Court has made an order for winding-up a com-
pany, the official receiver shall summon separate meetings of the creditors and
contributories of the company for the purpose of —

(a) Determining whether or not an application is to be made to the Court for

appointing a liquidator in the place of the official receiver ; and

(b) Determining whether or not an application is to be made to the Court for the

appointment of a committee of inspection to act with the liquidator, and
who are to be the members of such committee if appointed.

The Court may make any appointment and order required to g^ve effect to any
such determination, and if there is a difference between the detenninationa of the
meetings of the creditors and contributories in respect of any of the matters men-
tioned in the foregoing provisions, the Court shall dedde the difference and make
such order thereon as the Court may think fit.

(2.) The provisions of the first schedule to this Act shall, subject to such modifi-
cations as may be made therein by general rules, apply to any meeting summoned
in pursuance of this section.

(3.) In case a liquidator is not appointed by the Court, the official reoeirer shall
be the liquidator of the company.

'* The determination of the two meeting^." On these words Chitty, J., held in
Johannisberff Gold, ^., Co. (1892) 1 Ch. 683, that having regard to sub-sect. 2 of
R. 63 of ] 890, the Court had a discretion to exercise, unless at any rate all the
creditors and all the contributories at each meeting were unanimous. But sub-
sect. 2 of R. 63 of 1890 was annulled by R. 2 of April, 1896, for which R. 58 (2) <d
1903 (infra, Chap. XVIII.) has been substituted.

Bched. I. to Act of 1890 (which is to some extent taken from Sched. I. to the
Bankruptcy Act, 1883) appears to apply only to the Jirat meetings of creditors and
contributories (see sect. 2 (6), supra), and is as follows : —

(1.) The meetings of creditors and contributories shall be held within twenty-ono
days after the date of the winding-up order, or within such further time as the
Court may approve, unless a special manager has been appointed, in which case
such meetings shall be held within one month from the date of such order, or within
such further time as aforesaid.

(2.) The official receiver of the company shall sunmion the meeting by giving not
less than seven days* notice of the time and place thereof in the London Oagette and
in a local paper. Notice of such meeting shall also be sent by post to every person



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FIRST MEETINGS OP C!REDITOBS AND CX>NTRIBUTOBIES. 231

appearing hy the oompany's books to be a creditor of the oompanj and to eyerj
member of the company.

[A notice has also yery commonly been inserted in the advertisement of the
"winding-np order, thns : —

Notice is also hereby giyen that the first meeting of creditors will be held at Notice in

33, Carey Street, Lincohi's Inn, London, W.C., on the day of July, 19—, at winding-np

11 o'clock, and the first meeting of contribatories will be held at the same place on ^^"^^^
the same day, at 12 o'clock. And see Form 78a.]

(3.) The official receiyer shall also, as soon as practicable, send to each creditor Summary of
menti on ed in the company's statement of affairs, and to each person appearing from statement of
the company's books, or otherwise, to be a contributory of the company, a summary ^'*^^™*
of the company's statement of affairs, including the causes of its failure, and any
observations thereon which the official receiyer may think fit to make ; but the pro-
ceedings at any such meeting shall not be inyalidated by reason of any summary
or notice required by these rules not haying been sent or receiyed before the
meeting.

(4.) The meeting shall be held at such place as is, in the opinion of the official Where meet«
receiyer, most conyenient for the majority of the creditors and contributoriee. [In ings held.
London the place selected is usually the office of the official receiver, 33, Carey
Street, Linoobi's Inn, W.C.]

(5.) The official receiyer, or some person nominated by him, shall be the chairman Chairman,
at the meetings. [See Form 162, infra, and compare B. 126 of 1903.]

(6.) A person shall not be entitled to vote as a creditor unless be has duly proved Proof of debt,
a debt to be due to him from the company, and the proof has been duly lodged
before the time appointed for the meeting.

As to the mode of proving, see Chap. XXXVTI.

(7.) A creditor shall not veto in respect of any unliquidated or contingent debt,
or any debt tbe yalue of which is not ascertained.

[In Ex parte Ruffle, 8 Ch. 997, Mellish, L. J., was of opinion that similar words Contingent
in the Bankruptoy Act, 1869, were to be construed thus: ** a contingent debt" debt,
refers to a case where there is a doubt whether there will be any debt at all ; a debt
<* tbe yalue of which is not ascertained " means a debt the amount of which cannot
be estimated until the happening of some future event; and an <* unliquidated
debt " means not only aU cases of damages to be ascertained by a jury, but, beyond
that, extends to any debt of which the creditor fairly admits that he cannot state

the amount. But if a creditor can swear that a sum of /. at least is due to him,

he may be allowed to yoto accordingly. It is not enough for the creditor to swear
that he " estimates " the amount due at a particular figure. He must swear that
at least some certain sum is due.

In Me Parrott, 63 L. T. 777, it was held that a surety who had not paid, or been
called on to pay anything, could not vote, and no doubt a current policy-holder
cannot yoto. See also Canadian Pae\fle^ %o, Co,, 40 W. B. 40 ; and as to an annuity,
£s parte Pearee, 13 C. D. 262.]



Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 33 of 152)