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Liquidation, 725 - involuntary strike off, 726 grounds, 727 notice given…
Liquidation
liquidator
qualifications
s633
offence if practice and not properly qualified - 635
role of voluntary liquidator
function
to realise and distribute assets
assume managemnt of company and act as agent of company
duties
call meeting of creditors and company end of each year for creditors winding up - call meeting of creditors if think insolvent for members
cessation of directors powers
powers
630
some powers require special resolution in members winding up
power to pay class of creditor in full, compromise with creditors
unfettered powers in 627 - take legal action, carry on business, appoint solicitor, sell property
can disclaim onerous property
can apply to court for directions 631
comet food machinery
applied to have owners examined as felt diverted assets - application granted as creditor discharged proof
official liquidator
role and powers
can disclaim onerous property, can apply for mareva injunctions
conduct
principal duty to collect property and pay its debts
within 21 days submit statement of affairs
duties codified s 624- collect and gather property, realisation of it, distribute it
takes property into custody, list contributories, admit or reject proof of debts, pay debts, cooperate with court
liability
knowles v scott
not personally liable in absence of fraud, bad faith or personal misconduct
home and colonial insurance company
can be liable if breach statutory duties
706 final account when winding up complete to members
liability
home and colonial insurance
high standard of care and diligence, paid for service and can get guidance from court
removal of liquidator
s 683 court can remove for cause shown
revenure v fitzpatrick
hotel sold, sale by liquidator, fell through, hotel only significant asset and sale falling through meant loss invalue. court. wide discretion on court. not dependent on proof of misconduct or personal unfitness. need good cause that depends on case. approved decision to remove liquidator. concerns around not being cost effective
AMP entreprises v hoffman
if generally effect and honest court reluctant. not easy just because conduct fell short of ideal. hindsight not useful. don't want liquidator to be too cautious and keep looking over shoulder
buildlead
onus of proof on applicant. wide discretion on court. creditrs loss of confidence has to be reasoonable. court bear in mind impact on liquidator and consequences of delay
striking off company
methods
grounds
for failing to file annual returns - s. 726 -involuntary strike of
s. 731 - reasonable cause to believe company not carrying on business
send registered letter to company enquiring - if no answer received within month publish notice in Iris Oifigil
petition process 727
effect
doesn't affect liability of directors
company ceases to exist and property vests in state - state property act 1954
kavanagh and cantwell
property held by company
if continues to trade employees become employees of individual
restoring
within 12 months can apply - adminstrative action - cheaper
people can object
blenheiom leisure
show restoration just and equitable
nalto construction
within 20 years court process - if just that business restored can carrying on business at the time
barrowland
need to deliver copy of court order to registrar
consequences
if restored continue if never struck off
amantiss enterprises
- restoration order had effect of automatically validating retrospectively all acts done in name during strike off period
can be personally liable if continue to operate
dunleckney
struck off and restored, order sent to register, company wound up immediately after - had continued in existences - unable to pay
done for breaching filing requirements
gaultier
judicial review of registrations decision ordinarily not granted better to follow act provisions
effect of winding up
can repudiate contracts
directors powers cease
operates in favour of all creditors
no proceedings against court without their consent
distribution of assets
priorities
retention of title clauses, property held on trust, insurance, cost of proceedings, secured creditors, liquidators costs and expenses, preferential creditors, floating charge holders, unsecured creditors, members and contributories
preferential creditors
fixed charges on book debts
more attractive since finance act 1995
floating charges
s 579 - invalidaiton of floating charges created within 12 months going into insolvency
prevent execution or attachment of property to stop creditors skipping queue
617-624
priority for liquidators expenses and costs over general creditors
fixed charge holders priority - secured creditors can rely on security and stay outside process
all creditors must prove debts
617 costs - petitioner first paid, any costs incurred with winding up
Companies Act 2014
s 568
changes
liquidators require qualifications
cant be officer or employee within 2 years
liquidations by court may be directed to follow creditors winding up procedures
filing fees and forms
liquidation process to dissolve company and wind it up
reasons
fulfilled purpose
unable to work together
company served purpose
restraining petition to wind up
petition can pose serious threat to company and cash flow
Truck and Machinery v Komatsu
to restrain a petition presentation need to establish prima facie case - abuse of process -court may restrain if ulterior motive even if insolvent - not legitimate way of enforcing a debt
troon developments v Harrahill
disputed tax arrears due to revenue - held not unjust or inequitable to make winding up order
methods of dissolving a company
voluntary
creditors voluntary winding up
grounds
if no longer solvent can convert from members winding up
s 586 - allows members to resolve company cannot due to liabilities continue business
procedure
members can nominate liquidator but can be replaced by creditors at creditors meeting
if not solvent
members voluntary winding up
resolution
to wind up
within 14 days notice by advertisement in Irish Oifiuil s 581
general meeting where appoint liquidator by resolution - s 583
after report and declaration of solvency - special resolution
declaration of solvency
sworn by directors or majority
s 207 and 580 - full enqiry into affairs of company, formed opinon able to pay debts in full within 12 months
can be liable if not reasonable grounds
independent report
introudced by 580(4)
qualified at time of report to be auditor
favcon investments
no power to extend time limit for independent report to be received - became creditors voluntary winding up
Summary approval procedure - s 579 and 580
exceptions
constiution provides otherwise
expiration of fixed duration
grounds
company solvent - 578 - 584
certain event occurs (constiution)579
580 - allows members to pass resolution to wind up company
members retain control, minimal court involvement
conversion from members winding up to creditors
conversion by creditors
apply within 28 days of advertising of resolution - represtent 1/5th of value of all creditors
if unlikely able to pay debts
shannonside holdings
members resolution to wind up challenged by secured creditors - argued not bona fide - members advised members to wind up when company insolvent
petiition under 586
582
oakthorpe holdings
resolution passed, but didn't deliver declaration of solvency or call creditors meeting - could be wound up
automatic conversion
586
liquidator appointed by members, call meeting where of opinion declaration of solvency inaccurate - 584 call meeting with creditors
calls meeting with creditors within 14 days - can be replaced by members
conversion by liquidator
if no independent report along with declaration of solvency liquidator to apply to court for directions
members or creditors resolve to end life
involuntary liqudation
court winding up
liquidator officer of court
procedure
statutory requirements
petition present, filing fee - publish notice
locus standi
569 -member of creditor - reasons for winding up
RW Sharman
court can refuse to grant order order if majority of creditors would oppose
bula ltd
number of banks sought winding up to prevent another creditor registering judgment, court ischarged winding up order - nothing to be gained by petitioners
grounds
unable to pay debts
bona fide debt
can't be used as means of enforce disputed debt
truck and machinery sales v komatsu
keane j - necessary to show entire debt is bona fide disputed on substantial grounds - if entire or vast majority dispute and exceeds statutory minimum can't restrain petition
pageboy couriers
proceedings over debt became dormant, winding up petition not legitimate means of seeking to enforce payment of bona fide disputed debt - substantial and reasonable defence
court don't want process used to get upper hand in dispute
forrest lennon
sharheolder able to dispute debt
stonegate securities
if in good faith and on substantial grounds disputes any liability usually petition dismissed or restrained until resolved
meridan
complex dispute (bulk purchase) some of debt, petition not dismissed but not ordered to wind up - allowed time to settle with credtiors and voluntary liquidation
prove company insolvent - 570 - sets out level
taylor industrial flooring
proof of failure to pay is evidence of inability to pay
exceeding 10k - 21 days
connemara mining company
court apply balance sheet test or cash flow test
WMG Toughening
if debt disputed in good faith and substantial grounds winding up not legitimate means of enforcing legitmate debt
business not commenced within a year, just and equitable
just and equitable
wide discretion for court - Courtney most dynamic ground for petitioning
may be done if quasi-partnership
re murph's restaurant
2 brothers and friend, brothers worked together to exclude friend and drive him out of the business, removed as director. court held - deliberate and calculated repuidation by brothers of essence of the company - look if formed or continuing on personal relationship involving mutual confidence
McGilligan v Grady
obiter - if relationship indicates degree of mutual confidence and trust court might order winding up if one or more shareholder or director exercised powers in manner inconsistent with relationship
zinotty property
winding up ordered after didn't appoint shareholder as director who bought shares on promise would be
deadlock
yenidje tobacco co
differences between 2 manufacturers, in litigation, court ordered winding up
vehicle buildings and insulation
2 equal shareholders refused to work together or cooperate- court wound up
purpose of company no longer pursued - failure of substratum
fraud
re shrinkpaq
liquidator petitioned to wind up on basis of defrauding creditors by diverting business and funds -
ebrahimi v westbourne galleries
long partnership, equal share of management and profits, one removed from director office, relationship based on personal relations and good faith. after removal lost right to share in profits through remuneration. right to disolve
dublin and eastern regional tourism
just and equitable - company no longer able to continue to pursue purpose for which was incorporated
restraining peitions
improper motive
re bula
views of creditors
genport
bonafide dispute
cross claims -
emerald portable buildings
of sufficient substance - exceed petitioner debt
HJ Tomplins
view of preferential creditors more regard
ulterior motives -
genport
if evidence onus shift back on petitioner to prove winding up order proper- alleged doing to secure own debt and to prevent litigation - court if granted remaining creditors left with little, trade creditors wanted to continue - no benefit
burren springs
court retain discretion to refuse order, have regard for wishes of other creditors
discretionary
just and equitable be wound up
if insolvent not automatic right
genport
company unable to pay debt - McCracken J - nt mandator, if ulteiror motive then burden on petitioner to show otherwise - purpose suggested to prevent further litigation - not improper motive although didn't wind up - ultieror motive and winding up not of any real benefit
meridan communciations v eircell
disputed amount alleged - not dismissed as entire amount not in dispute
order of High Court - on insolvency or just and equitable grounds
star elm frames
court replaced creditors voluntary winding up with court order, Revenue concerns over phoneix operation. liquidator should have stood back and let creditors fight it out if in dispute. shouldn't have got involved. Reluctant to replace as little impact for costs involved.
conversion from voluntary to compulsory
s. 582 -HC jurisdiction to wind up company - voluntary liquidation can be converted on application of members or creditors
grounds
s269 / 569
show good cause why to be wound up
oakthorpe holdings
obiter that situations where members commenced winding up process but refused declaration of solvency that frustrated process and courts could intervene
gilt construction
court slow to overturn majority in number and value
powers of the court
to cross examine
671 - can summon person
aluminium fabricators
not admissible in civil or criminal proceedings other than winding up proceedings
comet food distributors
power discretionary, creditor has to prove beneficial to process
627
to exclude creditors
compel attendances at meetings
order delivery of company property to liquidator
do all things necessary
remuneration
s 647 - procedure for fixing remuenration
car replacements
wide discretion for court- basing solely on hours isn't ideal as doesn't encourage expeditious
725 - involuntary strike off, 726 grounds, 727 notice given 729 remedial steps, 730 publication of notice to strike off
voluntary strike of 730
restoration use legislation rather then judicial review
gaultier
may occur if shareholders dissatisfied with running of company and unable to secure more funds
steps. 1 Summary approval procedure. Directors meeting with members and meeting with creditors. correct notice of meeting. resolution advertised. creditors can apply to have it converted. declaration of solvency. indpendent report. appointe liquidator
Courtney - in solvent liquidations members beneficiaries, in insolvent creditors will be beneficiaries
eden education
students wanted liquidator replaced, need locus standi. trying to recover fees. Not allowed. breach of contract claim
normally initated by creditor, insolvent, grounds (oppressive, public interest, just and equitable_ commences from presentation of petiiton