Charles Mac Naughten Sir Francis Beaufort Palmer.

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

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liquidator by sect. 95 of the Companies Act, 1862. [See this seotion below.]

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

(4.) The liquidator of a company which is being wound up by order of the Court
may, with the sanction either of the Court or of the committee of inspection,
employ a solicitor or other agent to take any proceedings or do any business which
the liquidator is unable to take or do himself. The sanotion aforesaid most be a
sanction obtained before the employment, except in cases of urgency, and in such
cases it must be shown that no undue delay took place in obtaining the sanction.
[Compare sect. 12 with sect. 57 of B. A. 1883, and as to sub-sects. 1 and 4, see
Chap. XX., and Lindley on Companies, 6th ed. 983.]

Sect. 18 of 1890.— General rules may be made for requiring or enabling all or
any of the powers and duties conferred and imposed on the Courts by sects. 91, 98,
99, 100, 101, 102, and 107 of the Companies Act, 1862, to be exercised or performed
by the liquidator as an officer of the Court, and subject to the control of the Court.

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

Sect. 91 of 1862 relates to calling meetings of creditors and contributories, and
the liquidator's powers to do this are contained in sect. 23 (2) of 1890, and Rr. 121 —
131 of 1903, formerly Rr. 47—57 of 1890, R. 25 of April, 1892. See Chap. XXXVI.

Sects. 98, 99, and 100 of 1862 relate to settling the lists of oontributories, rectifying
the register of members, and coUeotiDg the assets and applying them in discharge
of liabilities (all of which duties were, under the practice prior to 1890, imposed on
the Court) ; and Rr. 78—85 of 1903, formerly Rr. 83—91 of 1890, have been made
to enable these duties to be performed by the liquidator. See Chap. XXXVIII.

As to sects. 98 and 99 and the rules thereunder, and as to sect. 100 of 1862 and
R. 79 of 1903, formerly R. 91 of 1890, see Chap. XXVII.

Sect. 102 of 1862 relates to making calls, as to which see Rr. 86—90 of 1903,
formerly Rr. 02—95 of 1890, and Chap. XXXVIII.

Sect. 107 of 1862 gives the Court power to exclude creditors not proving within
a certain time. See R. 119 of 1903, formerly R. 122 of 1890, and Form 67 of 1903,
and Chap. XXXVII.

The powers of a liquidator as to the admission and rejection of proofs are given
by Rr. 106—118 of 1903, and as to declaring and paying dividends by R. 119. See
Chap. XXXVn.

8eot. 98 of 1808 provides, inter alia, that the Court " shall cause the assets of the
company to be collected and applied in discharge of its liabilities."

B. 78 of 1908.— (1) The duties imposed on the Court by sect. 98 of the Companies
Act, 1862, in a winding-up by the Court, with regard to the collection of the assets
of the company and the application of the assets in discharge of the company's
liabilities, shall be discharged by the liquidator as an officer of the Court subject
to the control of the Court. [Formerly R. 89 of 1890.]

(2) For the purpose of the discharge by the liquidator of the duties imposed by
eeot. 98 of the Companiee Aot^ 1862, as varied by aect. 13 of the Aet of 1890, and



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LIQUIDATORS. 269

tlie last preoedmg Iqu. paragraph of this] role, the liquidator in a winding-up by the
Court shall for the purpose of aoqniiing or retaining poaseflBionof the property of the
company, be in the same position as if he were a receiver of the property appointed Quasi
by the High Court, and the Court may, on his application, enforce such acquisition receiver,
or retention accordingly. [Formerly B. 90 of 1890.]

B. 79 of 1908. — ^The powers conferred on the Court by sect. 100 of the Companies Possession of
Act, 1862, shall be exercised by the liquidator. Any contributory for the time assets,
being on the list of contributories, trustee, receiver, banker, or agent, or officer of
a company which is being wound up nnder order of the Court shall, on notice
from the liquidator, and within such time as he shall by notice in writing require,
pay, deliver, convey, surrender, or transfer to or into the hands of the liquidator
any sum of money or balance, books, papers, estate, or efiPects which happen to be
in his hands for the time being, and to which the company is primd facie entitled.
(Tonnerly R. 91 of 1890.]

Beet. 95 of 1889.-^The [official] liquidator shall have power [with the sanction of Specific
the Court (but see sect. 12 of 1890, supra)"} to do the foUowing things : — powers.

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

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

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

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

To prove, rank, claim, and draw a dividend, in the matter of the bankruptcy, or
insolvency, or sequestration of any contributory, for any balance against the
estate of such contributory, and to take and receive dividends in respect of such
balance, in the matter of bankruptcy, or insolvency, or sequestration, as a
separate debt due from such bankrupt or insolvent, and rateably with the
other separate creditors :

To draw, accept, make, and indorse any bill of exchange or promissory note in
the name and on behalf of the company ; also to raise upon the security of the
assets of the company from time to time any requisite sum or sums of money ;
and the drawing, accepting, making, or indorsing of every such bill of
exchange or promissory note as aforesaid on behalf of the company shall
have the same effect with respect to the liability of t)uch company as if such
biU or note had been drawn, accepted, made, or indorsed by or on behalf of
Bach company in the course of carrying on the business thereof :

To take out, if necessary, in his official name, letters of administration to any
deceased contributory, and to do in his official name any other act that may be - '
necessary for obtainin^f payment of any moneys due from a contributory or
from his estate, and which act cannot be conveniently done in the name of the
company ; and in all oases where he takes out letters of administration, or
otherwise uses his official name for obtaining payment of any moneys due
from a contributory, such moneys shall, for the purpose of enabling him to
take out such letters or recover such moneys, be deemed to be due to the
official liquidator himself :

To do and execute all such other things as may be necessary for winding-up the:
affairs of the company and dlBtributing its assets.



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370



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



Control by
oommittee of
inspeotioii,
&o.



Calling
meetings of
creditors, &o.



Directions of
Court.



Control by
Board of
Trade.



Duty of offi*
dal receiver
on outside
liquidator
being ap*
pointed.



8eot. 28 of IMO.— (1) Subject to the proTisions of the Companies Acts, the liquK
dator of a company which is being wound up by order of the Court shall, in the
administration of the property of the company and in the distribution thereof
among^ its creditors, have regard to any directions that may be given by reaobi-^
tion of the creditors or contributories at any general meeting, or by the committae
of inspection, and any directions so g^yen by the creditors or contributories at any
general meeting shall in case of conflict be deemed to override any directions g^ven
by the committee of inspection.

(2) The liquidator may from time to time summon gfeneral meetingfs of the cre-
ditors or contributories for the purpose of ascertaining their wishes, and it shall b0
his duty to summon meetings at such times as the creditors or contributories, by
resolution, either at the meeting appointing the liquidator or otherwise, may direct,-
or whenever requested in writing to do so by one-tenth in yalue of the creditors of
contributories, as the case may be.

(3) The liquidator may apply to the Court in manner prescribed for directions in
relation to any particular matter arising under the winding-up.

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

Sect. 94 of 1890. — If any person is aggprieved by any act or decision of the liqui-
dator of a company which is being wound up by order of the Court, he may
apply to the Court, and the Court may confirm, reverse, or modify the act or dm-
sion complained of, and make such order in the premises as it thinks just.

And see Chap. XLVIII.

Boot. 26 of 1890.— (1) The Board of Trade shall take cognizance of the conduct
of liquidators of companies which are being wound up by order of the Court, and
in the event of any such liquidator not faithfully performing his duties and duly
observing all the requirements imposed on him by statute, rules, or otherwise, with
respect to the performance of his duties, or in the erent of any complaint being
made to the Board by any creditor or contributory in regard thereto, the Board
shall inquire into the matter, and take such action thereon as may be deemed
expedient.

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

(3) The Board may also direct a local inyestigation to be made of the books and
Touchers of the liquidator of any company which is being wound up by order of
the Court. [From B. Act, 1883, s. 91. As to the Court interfering where the
Board's directions are disobeyed, see Ex parte Simmonty 2 C. D. 749. And see
Chap. L.]

B. 144 of 1908.— (1) Where a liquidator is appointed by the Court, and has
notified his appointment to the Begistrar of Joint Stock Companies and given
security to the Board of Trade, the official receiver shall forthwith put the
liquidator into possession of all property of the company of which the official
receiyer may have custody ; provided that such liquidator shall have, before
the assets are handed oyer to him by the official receiyer, discharged any
balance due to the official receiyer on account of fees, costs, and charges properly
incurred by him, and on account of any adyances properly made by him in
respect of the company, together with interest on such adyances at the f^te
of four pounds per centum per annum'; and the liquidator shall pay all fees.



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LIQUIDATOES. 271

costs, and charges of the official receiver which may not have been discharged bj
the liquidator before being put into posseasion of the property of the company, and
whether incurred before or after he has been put into snoh possession.

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

(3) It shall be the duty of the official receiver, if so requested by the liquidator,
to oommunicate to the liquidator all such information respecting the estate and
affairs of the company as may be necessary or conducive to the due discharge of
the duties of the liquidator. [B. 161 of 1890 (varied), taken from Bkcy. R. 318.]

B%ot. 91 of 1890. — Every liquidator of a company which is being wound up by Liquidator's
Ofder of the Court shall keep, in manner prescribed, proper books in which he shall books,
from time to time cause to be made entries or minutes of proceedings at meetings,
and of such other matters as may be prescribed, and any creditor or contributory of
the oompany may, subject to the control of the Court, personally or by his agent
inspect any such books. [From B. A. 1883, s. 80.]

B. 140 of 1908. — The official receiver, until a liquidator is appointed by the Court,
and thereafter the liquidator, shall keep a book, to be called the ^'Beoord Book,"
in which he shall record all minutes, all proceeding's 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,
or the official receiver or the Board of Trade. [From Bkcy. R. 285 ; R. 143 of 1890,
varied.]

B. 150 of 1903. — (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 the rules as to trading
acconnts) enter.from day to day the receipts and payments made by hun.

(2) The liquidator shall submit the record book and cash book, together with any
other requisite books and vouchers, to the committee of inspection (if any) when
required, and not less than once every three months. [From B. 144 (2) of 1890,
taken from Bkcy. B. 287. And see B. 150 (1) of 1903, as to cash book, in/ra^
Chap. XXIV.]

As to his duties on ceasing to be liquidator, see B. 158 of 1903, and Chap. XLIX.

Bbsignation.

B. 145 of 1908.— A liquidator who intends to resign his office shall summon
separate meetings of the creditors and contributories of the oompany to decide
whether or not the resignation shall be accepted. If the creditors and oontribu-
toriea by ordinary resolutions both agree to accept the resignation of the liquidator,
he shall file with the registrar a memorandum of his resignation, and shall
send notice thereof to the official receiver, and the resignation shall thereupon
take effect. In any other case the liquidator shall report to the Court the result of
the meetings, and shall send a report to the official receiver, and thereupon the
Court may, upon the application of the liquidator or the official receiver, determine
whether or not the resignation of the liquidator shaU be accepted, and may give
■obh directions and make such orders as in the opinion of the Court shall be
neoeseaxy. [This is new.] And see fft/ni, Chap. XLIX.



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

Bankruptcy.

B. 146 of 1903.— If a reoeiTisg order in liankraptoy is made against the liquidator,
he shall thereupon vacate his office, and for the pnrpoees of the application of the
Acts and Rules shall be deemed to have been remoyed. [See B. A. 1883, s. 85.
And see infra^ Chap. XLIX.]

Preliminary Steps.

Hie liquidator, unless he is the official reoeiver, should bear in mind that before
he can act as liquidator he must give notice of his appointment to the Registrar of
Joint Stock Companies (Form 187), and must give seourity to the satiabustion of
the Board of Trade. Until he has done these things he is not capable of acting as
liquidator. See sect. 4 (3) of 1890, p. 257.

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

Subsequent Steps.

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

ACXX>UNTS AND AuDIT THEREOF.
As to the accounts of the liquidator and the 'audit thereof, see sect. 20 of 1890,
andRr. 152 to 159 of 1903, set out in Chap. XXIV.

ACTIOKS.
As to liquidator bringing, continuiog and defending, see Chap. XXXII. The
action will be in the company's name ; even an application under ^t. 35 of 1862
to rectify the register of members ought not to be in the name of the liquidator.
Ex parte EmtrMy 5 Ch. 95. See, as to Canadian liquidators, Kent v. La CommtmaHti
dee 8ctur8 de Chariti de la Providencey (1903) A. C. 220. As to restraining. Chap.
XXXIII. When action necessary instead of summons in winding-up, eupra, p. 27*

Appeals from Liquidator.

Sect. 24 of 1890 (which is taken from B. A. 1883, s. 90) provides that if any
person is aggrieved by any act or decision of the liquidator of the company which
Is being wound up by order of the Court, he may appeal to the Court, and the
Court may confirm, reverse, or modify the act or decision complained of, and make
iBuch order in the premises as it thinks just.

As to who are persons ** agg^eved " in bankruptcy, see Williams on Bankruptcy,
p. 316 ; Jte Latnby (1894) 2 Q. B. 805.

In the High Court the application is made by summons, even where the appeal is
from the decision of the official receiver acting as liquidator. See R^ 5 of 1903^
National Wholemeal Co,, (1902) 2 Ch. 457 (an appeal against the rejection by the
liquidator of a proof). In other Courts the appeal is heard in open Court. R. 6
of 1903.

As to appeals by the liquidator from orders of the Court, see Forms, tft/m.
Chap. XLVIII.



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LIQUIDATORS.



Bankino Aooottnt.

AH monejrs repdred by a liqtddator in a oompulsoiy winding-up mtist be paid,
without deduction, into the Companies Liquidation Account, unless an account
with any other bank has been authorized by the Board of Trade under sect. 11 of
1890. Remittances are to be made once a week, or forthwith if a sum of 200/. has
been received. See Board of Trade Regulations, January, 1893, Appendix B., and
Chapa. XXIV. and XXV.

BoABD OF Trade.

Seotkm 26 of 1890 places the liquidators under the control of the Board of Trade,
and enables the Board of Trade to require information from liquidators, and to order
a local inyeetigation. And the liquidator has to give security to the satisfactioli of
the Board of Trade, who can increase or diminish his security as occasion may
require. See sect. 4 (3) of 1890, 9upra; R. 60 of 1903 ; and wpra^ Chap. XIX.

Books to be Kept.

The liquidator should apply to the official receiyer for deliyery of the Record
Book and Cash Book. See Rr. 149 and 150 of 1903. As to booln to be kept, see
sect. 21 of 1890, and the rules above referred to.

As to handing over on resignation, release or removal, see R. 168 of 1903.



BOBIWVIKO.

The power to borrow, which may be exercised without the sanction either of the
Court or the committee of inspection, is conferred by the joint operation of sect. 12 (2)
of 1890, and sect. 96 of 1862. See Chap. XXVIIL

Galls.

The power to make oaUs cannot be exercised until a list of contributories has
been settled, and not then until the special leave of the Court or the sanction of the
committee of inspection has been obtained. The power is conferred by the joint
operation of sect. 13 of 1890, and Rr. 86 and 90 of 1908. See Chap. XXXVIII.

Oaeryino on Bttsiness.

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

Collection of Assets.

See sect 98 of 1862, and Rr. 78 and 79 of 1903. In order to collect the
property of the company, the liquidator should by himself or his agents take
poeseesion and place in safety the movable assets, and should g^ve notice to aU
debtors calling on them to pay to him the debts owing from them respectively to
the company, and, if necessary, he should take legal proceedings to obtain
possession, and to recover moneys and assets outstanding. See, further, ''Posses-
infra,
V. T



273



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274 WINDING-UP BY THE COUET. [ChAP, XXI.

COIQCITTEB OF INSPECTION.

See sect. 9 of 1890 as to the appointment and prooeedings of the committee.
If there is no oommittee, see B. 188 of 1903. See farther, as to oommittee of
inspection, Ohap. XXII.

Compromises.

•The power to compromise is conferred bj sects. 159 and 160 of 1862. By
sect. 12 (1) of 1890 the liquidator is empowered to exercise the powers oonfened
bj those sections with the sanction either of the Court or of the oommittee of
inspection. See, farther, Chap. XLVI. ; and CycU Jfaktrs* Co-operative Supplff Co.
T. 5i»M, (1903) IK. B. 477.

As to the official receiver reporting to the Court, see B. 77 of 1908.

OONTRIBTTTOBIBS.
See Chap. XXXVIII.

Control op Court.

The exercise by the liquidator of his powers is subject to the control of the
Court. Sects. 94—97 of 1862 ; sect. 12 (3) of 1890, and sect. 13 of 1890 ; and Br. 78»
79, 86, 87 of 1903.

Costs.

As to the liquidator's costs in the winding-up, see tn/ra. Chap. XLVII.

As to his costs of outside litigation, see infra^ ** LmoATiov " ; and Chap. XLVII.

An appeal lies from a refusal to gpive a liquidator his costs out of the company'^
assets. Silver Valley Minet, 21 C. D. 381. In County Court cases the appeal lies
to a Divisional Court of the King's Bench Division. Baynee Park Oolf Club, (1899)
1 Q. B. 961.

As to costs of litigation with public authorities, see Public Authorities Brotectioa
Act (56 & 57 Vict. c. 61). A company incorporated by statute, not only for the
perfbrmanoe of duties of public utilily, but also for the purpose of earning proflts^
has been held to be not entitled to the benefit of the Act. AtL^Otn, y. Margate
Fier Co., (1900) 1 Ch. 749.

Creditors.

It is the duty of the liquidator to find out from the books and papers of the com-
pany and the statement of its affairs who are its creditors (cited with approval in
Fulsford V. Devenish, (1903) 2 Ch. 625). If any creditor omits to put in his daim, the
liquidator should communicate with him. After a winding-up order the sta t uto ty'
limitation does not run as against the creditors of the company, and mere delay in
giving in the daim does not exclude the creditors from partidpating in the fund.
See General Soiling Stock Co., 7 Ch. 646, and Form 431.

And see further as to creditors, post, Chap. XXXVII.

Debentures.

The subject of debentures and debenture stock was dealt with in some detail in
earlier editions of Farts I. and U. of Company Precedents, but Part ILL of Com-
pany Precedents (in its 9th edition) is now devoted to this subject.



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LIQUIDATORS. 27$

DiBBCTIONS OP OOUKT, CbEDITOBS, CoiTrRIBUTOBIKS, AND OOMMITTBE.

Fnder aeot 23 (1) of 1890, whioh is taken from ieot. 89 of the Bankruptoj Act,
1883, the liquidator ia ** to have regard '' to the directions of the creditors or con-
tribatories, or oomtnittee of inspection, and paragraph (3) of the same section pro«
Tides that the liquidator may apply to the Court in manner prescribed for directions
in relation to any particular matter arising under the winding-up. The application
should be by sunuoons (see Rr. 6, 6 of 1903), supported by the necessary evidence.

The expression **haTe regard to the directions of the creditors, &c.," does not How far
import that the liquidator must obey such directions. No doubt it would not be ^^^^^^ ^
proper to act contrary to the directions so given, but if the liquidator thinks that it ^^g^I^* *^*
would not be expedient to comply with such directions, he can apply to the Court
for directions, and the Court may make an order directing him to disregard the
prior directions. £x parte Cocks ^ 21 C. Div. 405 (decided on similar provisions in
the Bankruptcy Act, 1869). Indeed, the liquidator is bound to consider the pro-
priety of the directions given by the creditors, contributories, or committee of
inspection, for if those directions are unreasonable, and he acts thereon, he may be
ordered personally to pay the resulting costs. Ex parte £roum, 17 Q. B. DIt. 492.



Online LibraryCharles Mac Naughten Sir Francis Beaufort PalmerCompany precedents for use in relation to companies: subject to ..., Volume 2 → online text (page 38 of 152)