In case there is a surplus in the assets, the liquidator of the company will prepare a list of those members, who are entitled to share this surplus. Bank will freeze the account following a petition When a winding up petition has been advertised, your bank will hear about it as it is published in the London Gazette and freeze the account. If a secured creditor instead of relinquishing his security and proving his debt proceeds to realise his security, he shall be liable to pay his portion of the expenses incurred by the liquidator including a provisional liquidator, if any for preservation of the security before its realisation by the secured creditor. Where there is a resolution for voluntary winding-up, before the presentation of the petition to Court, the winding-up is deemed to commence from the date of the resolution. In effect, the membership of the company is frozen once winding up commences. The court shall immediately send the intimation of the fact to the Official Liquidator and the Registrar Sec. It depends upon the facts of each case.
All communications between them were made through the secretary as they were not on speaking terms with each other. When an order is made for winding up, it relates back to the date of the presentation of the petition. What can be done to stop a petition being served in the first place? Power to fill vacancy in office of liquidator Section 506 : If a vacancy occurs by death, resignation or otherwise, in the office of a liquidator other than a liquidator appointed by, or by the direction of, the Court , the creditors in general meeting may fill the vacancy. Winding up order under this head is not common because normally the members of a company prefer to wind up the company voluntarily for in such a case they shall have a voice in its winding up. Effect of petition for winding up section 523 : A petition for the continuance of a voluntary winding up subject to the supervision of the Court shall be deemed to be a petition for winding up by the Court. The method of calculation may have the anomalous effect of creating taxable capital gains upon the receipt of, for example, a liquidation distribution comprising retained earnings and a portion of the originally contributed capital.
Winding up by the Court Section 433 to 483. The liquidator s appointed upon the winding up of the company to manage the affairs of the company for the purpose of the liquidation shall: 1. Where the company has gone into liquidation within 6 months of the creation of a floating charge, that charge is void except to cover the amount of cash advanced to the company at the time of creation or subsequently, together with interest at 5% per annum. Once this has been done the company will usually be dissolved by the liquidator. Section 305 of the ordinances justifies the following circumstances where the court may wind up the company based upon a petition submitted to a court.
The Court may dispense with compliance with this provision. At any time after a company has passed a resolution for voluntary winding up, the Court may make an order that the voluntary winding up shall continue, but subject to the supervision of the Court. Notice to company before appointment of provisional liquidator : Before appointing a provisional liquidator, the Court shall give notice to the company and give a reasonable opportunity to it to make its representations. The court will require proof of solvency or insolvency to determine this matter. As a result, no more payments can be made from or into the account. The law classifies liquidations into two types: which is by a shareholders' resolution or compulsory by a court order. His liability continues even after the company goes Into liquidation, but he is then described as a contributory.
Remuneration payable in respect of vacation leave accrued before or after the commencement of the winding up. If the creditors and members do not agree on a common list, the Court may constitute a committee of inspection. The Registrar on receiving the account and return shall register them. Letter or notice to company to be sent at registered office or care of director etc. Application by aggrieved member or creditor within 20 years: If the company, or any member or creditor of the company, feels aggrieved by the name of the company having been struck off the Register, he may, within 20 years from the publication in the Official Gazette of the notice aforesaid, apply to the Court. The report shall contain particulars — a as to the amount of the capital issued, subscribed, and paid-up, and the estimated amount of assets and liabilities.
However, these provisions will not be applicable to any proceedings pending in appeal before the Supreme Court or a High Court Sec. The Official Liquidator on receiving them, shall make a scrutiny of the books and papers of the company. Any arrangement entered into between a company about to be wound up voluntarily and its creditors shall be, subject to the right of appeal under section 139, binding on the company if sanctioned by a special resolution, and on the creditors if acceded to by seventy-five per cent in number and value of the creditors. In all other cases i. A bank allowed overdrafts to a company for the purpose of paying the wages of the company on the understanding that an amount equal to the loan would shortly be paid in order to reduce the overdraft. So long as there is no liquidator, all the property and effects of the company shall be deemed to be in the custody of the Court.
Disposition of property after the date of a winding up petition can actually have serious effects on the directors of the company if a winding up order is granted by the winding up petition court. When is a company unable to pay its debts? The liquidator has no power to carry on business with a view to resuscitating the company or making profits. Consequences as to costs If assets are insufficient to satisfy liabilities, the Court may order for payment of the costs, charges and expenses of the winding up out of the assets of the company. Such companies cannot be wound-up voluntarily. Normally this only happens after winding up order advertisement in the London Gazette but it can happen beforehand if it becomes public knowledge in other ways.
A contributory means a person liable to contribute to the assets of the company on the event of its being wound up and includes the holder of shares which are fully paid up. He shall then call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meeting and giving explanation therefor. This is because the bank does not want to be held responsible for monies leaving the bank account after the date the winding up petition was issued. The liquidator shall carry on the business of the company principally to enable the business to be sold off as a going concern. Statement of Affairs : When the liquidator has been appointed, a Statement of Affairs of the company is to be made to him in the prescribed form, verified by an affidavit, and containing particulars regarding the assets, liabilities, names and addresses of the creditors, etc. The payment shall, however, be subject to the rights of secured creditors. For this purpose a general meeting may be convened by any contributory or by the continuing liquidator or liquidators, if any.
It shall also give notice of every vacancy occurring in the office of liquidator and of the names of the liquidators appointed to fill every such vacancy. If the company is solvent the shareholders can supervise the liquidation. This is invariably done by banks in order to protect themselves in the event that a winding up order is made against the company. Gupta had ceased to be a member of the company for a period of one year or upwards before the commencement of the winding up. This is because any transaction after a winding up petition has been served can be reversed by the court. The payment must be made in such order of priority, inter se, as the Court thinks just.