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distribution of assets on winding up - Coggle Diagram
distribution of assets on winding up
liquidators role
investigate affairs of company
pool and realise all of the assets
distribute the assets
Line bros
adminster fund as if managing trust fund
602
dispositiosn after winding up
void unless court validates
purpose
PMPA Coaches
to ensure assets collect and distributed in line with preferences and priorities created by legislation - hardship by itself doesn't validat payment
Wiltshire Iron
wholesome and necessary provision too prevent alienation and disspissation of property
disposition
giving away or passing of an interest - includes property, transfer of shares, alteration in status of members
french's winebar
company entered uncoditional contract pre-presentation - completed performance of contract after presentation of petition - not disposition
motor racing circuits
appointment of receiver no disposition, because debetnure document provided for appointment of receiver (that was when disposition took place)
simons taxes - ordinary word - incurring a liability - sale, gift, loans
validation of disposition
ashmark
payment be cheque to solicitor written pre-presentation, cashed after presentation. payment for service performed.held could be justified but declined as solicitor constructive notice of petition - hard to justify payment in full
McBirney
- main objective of 618 is to protect crediors - payments by receiver manager after winding up- some validated (payments to employees - preferential creditors), to third parties. payments to connected companies ordered to be repaid
AI Levy Holdings
validatied - disposition necessary in order to increase funds as necessary to sell property
Lynch, Monaghan and O'Brien
- discretionary power
Industrial Servies Company
some payments validated. if recover monies from bank can;t also seek to recover monies from ultiamte recipients and can't hinder banks from making recovery
begins from date of presentation of petition
effect of order
all assets of company at time of winding up applied to liquidation
any disposition which directors purport to make after wind-up commenced is void unless court validates
post commencment banking transactions
ashmark
where cheque written neforepresentation of petition, disposition didn't take place until cheque drawn - if after petition presented - void
grays inn construction compnay
any payment out of account and into account constitutes disposition, including into overdrawn account - reducing overdraft
english approach
hollicourt
bank operating manual checking system for winding up peititons, missed one due to oversight, account operated as normal rather then freezing it. court held - not liable - acting in capacity as agent - not unjustly enirched
coutts and co v stock
winding-up petition presented, bank honoured cheques drawn on overdrawn bank account court held - effect of 602 invlaidted payments only against payees and not against bank - bank not unjustly enriched - bank acting in capacity as agent
express electrical distributors v beavis
comapny customer, express requirment each invoice paid before last day of month immediately after delivery, winding up petiition by different creditor. liquidaotr wanted 30k repaid. no validation order. payment not in ordinary course of business quicker then usual
irish approach
industrial services company
reversed Hollicourt - payments in and out after presentation as failed to see peition - court held - banks fault should vigilent - bank liable to put account back in position should have been- payments in and out dispositions (grays inn) legislation intended instiutional creditors be vigilent for the mandatory advertisements.
Courtney - critical of Kearns J - injustice on person not benefiting from transaction - could amount to unconsitutional intrustion
worldport
held both payee and bank dually liable - unrealistic only bank should be held lialbe
602(3)
- legislative change - no personal liability attaches to an innocent party
Courtney - justice been restored - need actual notice to be held liable
MB Regrigeration and air conditiontioning
-
liquidator brought application seeking declaration that certain transactions carried out without liqudators sanction - liquidator sought order - court held - payments before actual notice valid and AIB not liable - after notice AIB liable
debiting of interest
ashmark ltd: ashmark v AIB
aib charge interest on account after peititon presented - paymnet of interest not a disposition - debiting of interest not disposition - interest accrues after winding up remains due to bank
604
change from 1963 act - term fraudulent removed - changed to unfair preference
proof of intention to prefer required
intention to give preference over other creditors
le chatelain thudichum v conway
MR Thudichum managed Spar, and leased premises, difficulties. during stock take respondent took cash and stock. company wound up. unable to pay debts
court - liquidator must prove transfer of property or funds done with
dominant intention
of preferring recipient over other creditors - any inference drawn must have taint of dishoensty
court dislikes drawing inferences which involves dishonesty unless solid grounds - not sufficient evidence of intention to prefer - did have effect of fraud
kennington v McGinley
to order unfair prefrence dominant intent behind payment to prefer benficiary - onus on lqiudator not discharge where facts establish unfavourable and favourable inference
disposition of corproate property
conney v dargan
transaction could not be subject of 604 order as didn't constiute disposition of corproate property. nothing executed even if intention was there
necessary element
timing
6 months prior or 2 years for connected peson
insolvency
intention to prefer
parkes and sons
company's controller stood to gain personally, not dominant motive where
bank threatened to appoint receiver -
only entered transaction due to pressure
station motors
intention must be the dominant intention at time - lodgements into company's current account which
director had personally guarantee
d - inferred dominant intention was to prefer bank
corran construction company v bank of ireland
company depsoited title deeds of premises with bank as security for loan. company gave bank fresh mortgage
- held main desire to keep company going, pressure exerted by bank
- dominant intention was to keep company going - generally up to liquidator to prove intention
elite logistics v mcnamara
transfer of main asset to director unfair - made when insovlent 10 days prior to winding up- presumed preference to prefer
o'connors nenagh shopping centre
mortgage created in favour of bank when
knew insolvent
and within 6 months, creation prefered bank over other creditors - Gilligan - not sufficient to show effect -
need domiannt intention
- if no direct evidence can draw inference where some other explantion is open -
intention to keep business going
and hopefully succeed
onus of proof
on liquidator unless made to conencted person
effect
invalid or void ab intiio - rights of person title in good faith and for valuable consideration not effected
beneficiary must be creditor -
Parks and sons v Hong Kong
purpose
de taset v carroll
unjust to permit party on eve of winding up favour one particualr creditor over others
608 fraudulent
le chatelain thudichim v conway
Murphy J - disposition, of company property effect of fraud - entering premises and taking stock and cash
leo getz
classic cars trading - loans to brother - liquidator wanted them returned charleton j - no unfair preference because requiste intention didn't exist- looked at fraud - need to show property disposed of and effect to perpretrate fraud
petrolo
effect of disposal to perpetrate fraud on company creditors or members
re tucon process
only person to bring 608 application are lqiudator, creditor or contributory - court held fraud means diversion of property from entity or person lawfully entitled to it - payments to unsecured creditors by itself won't trigger - needs additional ingredient which amounts to impropriety
devey enterprises
payments to directors loan account - was unfair preference and fradulent disposition - failed to main proper books - laffoy - satisfied fraud on company and creditors
citywest hire
fraud criteria - showing deprive of something lawfully entitled - money deposited deprived citywest of monies entitled to
MPS global
looked at just and equitable discretion, K transfer money to P who claimed used money to settle loans, payment disposal and improper as settled private debts so fraud - just and equitable what is right by reference to parties actions
reckless trading
610 if knowingly party to carrying in reckless manner or with intent to defraud court power to hold person personally liable
knowingly reckless
can be relieved if acted honestly and responsibly
intent to defraud
william leith brothers
incurred debts with knowledge creditors wouldn't get paid - infered carrying on business with intent to drfraud
kellys carpetdrome
controller arranged for destruction of records view of defrauding revenue- held guilty
aluminium fabricators
dual dystem of bookkeeping - dishonesty or misconduct can make intention to drfraud easier to establish
hunting lodges
arrangment to divert half of proceeds of sale to fictious account fraudulent
irish cases
heffernon kearns
construction company, directors abandoned 2 jobs to concentrate on 3rd so would get paid - held not guilty unless carrying on business that would involve obvious ad serious risk of loss - directors good reason to believe would be able to pay - not personally liable - didn't knowingy carry on -
subjective reckelssness
would be required = would need to know of risk and ignore it - guilty of reckless trading but mistaken belief that would benefit creditors absolved him of personal liability
PSK construction
non-executive director partner of executive director, NE aware of cash flow problems and of under-declaration to revenue, had been told would be sorted, ED aware contract loss making, ignroed auditors advice but did intend to be temproary - ED guilty - NE not - didn't have sufficient knowledge
deened reckless
regard for skill and experience reasonably expect of person in that positioon - did not honestly believe on reasonable ground company able to pay debts when due
appleyard motors
car dealership, emailed expressing interest in buying cars, credit search, money transfered for vehicles, dealer then had to get permission from bank before sourcing cars - bank withdrew support - HC - personally liable to creditors - should be more careful - CA no reckless trading - not personally involved in transaction, couldn not have known would cause creditors loss
loss must have involved high degree of certainty to creditor to be held personally liable - could not have known decision to cut off would happen imminently or even threatened when took the money
insolvency requirement
unable to pay debts
failing to keep account records
609 - personal liability for inadequate accounting
mantruck services
how much failure contributed to loss of company while insolvent
mehigan v duignan
company insolvent and no books kept, liquator spent 80% of time trying to overcome deficiencies- l iable for 80% of debts - impeded winding up
conroy
books mixed with records of another company, causal connection to inability to pay debts - personally liable
vehicle imports
responsibility of all directors
o'keefe v ferris
limited liability creature of legislation, what legislure grants can withdraw
dev oil and gas
personally liable as impede ability to recover debts (didn't keep names and address of purchasers)