LIQUIDATION—LIQUIDATOR.—When a company incorporated under the Companies Acts is in course of dissolution, or being wound up, it is said to be in liquidation. It does not necessarily follow, however, that a liqui dation is an indication of a company's insolvency. The company may go into liquidation for other reasons ; it may be, for example, for the purpose of a reconstruction or an amalgamation, or because the objects for which the company was formed have been attained. The liquidator is the person appointed to wind up the company, to collect and distribute its assets, and to bring its career to a termination. There are three modes of liquidation, and these were the subject of several now repealed statutes, hut are now dealt with by the Companies (Consolidation) Act, 1908. The liquidation may be voluntary ; (b) voluntary, but under the supervision of the Court ; or (c) by the Court. A detailed account of the whole subject of liquidation being impossible within the limits of this article, it is proposed to give as useful an outline as possible.
Voluntary.—Circumstances under which it is company may be wound up voluntarily—(1) 1Vhenever the period, if any, fixed for its duration by the articles of association expires; or whenever the event, if any, occurs upon the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily ; (2) whenever the company has passed a special resolution requiring the company to be wound up voluntarily ; (3) whenever the company has passed an extraordinary resolution to the effect that it has been proved to its satisfaction that it cannot by reason of its liabilities continue its business, and that it is advisable to wind it up. For the purposes of the Acts a resolution is "extraordinary" if passed in such a manner as would, if it had been confirmed by a subsequent meeting, have constituted a special resolu tion. The winding-up commences at the time of the passing of the resolu tion which authorises it. The company then ceases to carry on business, except so far as required for its beneficial winding-up ; and all subsequent transfers of shares, except to or with the sanction of the liquidator, and alterations in the status of the shareholders, are void ; but the corporate state and powers of the company continue until it is wound up. Notices of the winding-up resolutions should be advertised in the London Gazette, or the Gazette, or the Dublin Gazette. Consequences of Certain important and necessary consequences ensue upon the winding-up. The property of the company must be applied in satisfaction of its liabilities pari passu. Subject thereto, the property is distributed amongst the members of the company according to their rights and interests therein, or otherwise, according to the regulations of the company. A liquidator must be appointed for the purpose of winding-up and distributing the property. He is appointed by the company in general meeting, the latter being able to appoint any person it thinks fit, and to fix his remuneration.
The statutory provisions apply as well to a case where several liquidators are appointed as where there is only one. Upon his appointment, all the powers of the directors cease, except so far as the company in general meeting or the liquidator may sanction the continuance of those powers. And where several liquidators are appointed, every statutory power tan be exercised by any one or more of them, as niay be determined at the time of their appointment, or in default of such determination by any number not less than two. A liquidator has all the powers of an official liquidator, that is an official receiver, in a compulsory winding-up; and he has full power to settle the list of contributories of the company, and any list so settled is facie evidence of the liability of the persons named therein to be contributories. At any time after the passing of the resolution for winding-up, even before the sufficiency of the assets of the company has been ascertained, a liquidator is entitled to make a call on all or any of the contributories for the time being settled on the list. This call is limited to the extent of their liability. Its object may
be to pay with its proceeds all or any sum the liquidator considers necessary to satisfy the debts and liabilities of the company, and the costs, charges, and expenses of winding it up, and for the adjustment of the rights of the contributories as between themselves. In making a call a liquidator can take into consideration the probability that some of the contributories upon which it is made may partly or wholly fail to pay their respective portions of it. A liquidator has the fullest right, and is even under a legal obligation, to pay all the debts of the company and adjust the rights of the contributories as between themselves. There is also a means by which the creditors of the company can obtain control of the liquidation. Thus a company about to be voluntarily wound up, or in the course of the winding-up, can, by an extraordinary resolution, delegate to its creditors, or to a committee of them, the power of appointing liquidators or supplying vacancies in that office. ()r the company, by a like resolution, may enter into any arrangement with respect to the powers to be exercised by the liquidators, and the manner in which they are to be exercised. Any act done by the creditors in pursuance of such a delegated power has the same effect as if it had been done by the company itself. And an arrangement can be come to between a company about to be wound up voluntarily, or in the course of winding-up, and its creditors. I3ut such an arrangement, to be binding on the company, must be sanctioned by an extraordinary resolution, and, to be binding on the creditors, must be acceded to by three-fourths in their nuiiber and value. An arrange ment so made can be amended, varied, or confirmed by the Court, at its discretion, upon application by a creditor or contributory, provided the application is made within three weeks from the date of the completion of the arrangement. And this is not by any means the only occasion upon which the Court will interfere in the course of a voluntary winding up. Application can always be made to the Court, by the liquidators or any contributory, or by a creditor, where there is appropriate occasion for its interference. An application may thus be made to determine any question arising in the winding-up, or to exercise, as respects the enforcing of calls, or in respect of any other matter, all or any of the powers which the Court might exercise if the company were being wound up by the Court. This right of a liquidator to apply to the Court for advice and assistance is a very valuable one and is extensively exercised. During the continuance of a winding-up, liquidators have power to summon general meetings of the company for the purpose of obtaining a sanction by special or extraordinary resolution, or for any other purpose they think fit. If a winding-up continues for more than a year, they must summon a general meeting at the end of the first year, and of each succeeding year from the commencement of the winding-up, or as soon after as convenient. At such a meeting they must present an account of their acts and dealings, and the manner in which the winding up has been conducted during the preceding year. Two special provisions for the filling up of vacancies in liquidators should be noted :—(1) If a vacancy occurs in the office of liquidators appointed by the company, by death, resignation, or otherwise, the company in general meeting, subject to any arrangement they may have entered into with their creditors, may fill it up; and that general meeting may be convened by the liquidators, if any, or by a contributory of the company and the meeting w will be duly held if held in the manner prescribed by the regulations of the company, or in such other manner as, on application by the continuing liquidator, if any, or by a contributory, may be ordered by the Court. (2) If from any cause whatever there is no liquidator in the case of a voluntary wilding-up, the Court, upon the application of a contributory, can appoint a liquidator or liquidators. The Court may also, on due cause shown, remove a liquidator and appoint another to act in his stead.