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Winding up of company
Picture: The Law Study

 

Winding-up: conduct of

(1) The company ceases to carry on business except for purposes of winding-up. All the company’s stationery must indicate that the company is being wound up.
(2) The liquidator makes out a list of contributories and makes calls if necessary, for which the sanction of the court is needed in a compulsory winding–up. A shareholder cannot set off calls due against debts owed by the company.
(3) The order of payment of debts is similar to bankruptcy
(4)A creditor wishing to be paid must prove for his debt within a time to be fixed by the liquidator. If he does not prove in time, it may still be paid if there are assets remaining. The cost of proof may be added to the debt. Debts provable include ‘debts payable on a contingency and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages’ (Companies Act 1985, Action 611). The liquidator should not pay statue-barred debts.
(5) The liquidator may disclaim leasehold property. If the occupies it, he must pay the rent in full during the time of occupation. There may be a provision in the lease allowing for forfeiture on liquidation but the liquidator may apply to the court. If the liquidator disclaims he also needs court permission and the landlord nay sue for any damage suffered.
(6) Interest payable ceases at the commencement of liquidation.
(7) Certain dispositions of the property of the company may be avoided by the liquidator, e.g. an assignment to a trustee of all property for the benefit of creditors will be void, and floating charges made within twelve months of the winding-up by insolvent companies are void though this does not apply to cash borrowed plus interest at 5 per cent. The charge is void, not the loan.
(8) All servants of the company are automatically dismissed.
(9) Proceedings may if necessary be taken against directors and officers of the company on the grounds of fraudulent trading, etc.
(10) Proceedings against the company may be stayed
(11) The company is dissolved (a) in a compulsory winding-up by an application to the court by the liquidator. The court makes an order dissolving the company. The order goes to the Registrar of Companies; (b) in a voluntary winding-up by the liquidator’s sending a return to the Registrar within a week of the final meeting. The company is then automatically dissolved three months afterwards; (c) in a reconstruction by order of the court; (d) by striking off the Register. Dissolution can be revoked within two years by application to the court.

 

 

 

Reference: The Penguin Business Dictionary, 3rd edt.