WINDING UP. Where a company, for any reason, has to be brought to an end, it is accomplished by " winding up," and the company is said to be " in liquidation." It may be wound up because of its inability, financially, to continue, or because of a reconstruction, or of an amalgamation with another company.
A company may be wound up in three ways. The Companies (Consolidation) Act, 1908, Section 122 provides : " (1) The winding up of a company may be either- " (i) by the Court ; or " (ii) voluntary ; or " (iii) subject to the supervision of the Court.
" (2) The provisions of this Act with respect to winding up apply, unless the contrary appears, to the winding up of a company in any of those modes." (See COMMITTEE OF 1 NSPECTION, COM PANIES, COURT—POWERS OF, LIQUIDATOR, OFFICIAL RECEIVER, RECEIVER, STANNARIES, WINDING UP BY THE COURT, WINDING UP SUBJECT TO SUPERVISION OF THE COURT, WINDING UP UNREGISTERED COMPANIES, WINDING UP VOLUNTARILY.) The following are some of the supple mental provisions with respect to winding up: 207. In the winding up of an insolvent company registered in England or Ireland the same rules shall prevail and be observed with regard, to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annui ties and future and contingent liabilities as are in force for the time being under the law of bankruptcy in England or Ireland, as the case may be, with respect to the estates of persons adjudged bankrupt ; and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up, and make such claims against the company as they respectively are entitled to by virtue of this Section.
Effect of Floating Charge.
" 212. Where a company is being wound up, a floating charge on the undertaking or property of the company created within three months of the commencement of the winding up shall, unless it is proved that the company immediately after the creation of the charge was solvent, be invalid, except to the amount of any cash paid to the com pany at the time of or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount at the rate of five per cent. per annum.
General Scheme of Liquidation may be Sanctioned.
" 21.1. (1) The liquidator may, with the sanction following (that is to say) " (a) in the case of a winding up by the Court in England with the sanction either of the Court or of the com mittee of inspection ; " (b) in the case of a winding up by the Court in Scotland or Ireland, and in the case of any winding up subject to supervision, with the sanc tion of the Court ; and " (c) in the case of a voluntary winding up, with the sanc tion of an extraordinary resolution of the company, do the following things or any of them : " (i) Pay any classes of creditors in full ; " (ii) Make any compromise or arrangement with creditors or persons claiming to be creditors, or having or al leging themselves to have any claim, present or future, certain or contingent, ascer tained or sounding only in damages against the com pany, or whereby the com pany may be rendered liable ; " (iii) Compromise all calls and liabilities to calls, debts, and liabilities capable of result ing in debts, and all claims, present or future, certain or contingent, ascertained or sounding only in damages, subsisting or supposed to subsist between the com pany and a contributory, or alleged contributory, or other debtor or person ap prehending liability to the company, and all questions in any way relating to or affecting the assets or the winding up of the company, on such terms as may be agreed, and take any se curity for the discharge of any such call, debt. liability
or claim, and give a com plete discharge in respect thereof.
3.41 " (21 In the case of a winding up by the Court in England the exercise by the liquidator of the powers of this Sec tion shall be subject to the control of the Court, and any creditor or contributory may apply to the Court with respect to any exercise or proposed exercise of any of those powers." With respect to the disposal of the books and papers of a company which has been dissolved, Section 222, s.s. 2, enacts : " (21 After rive years from the dissolution of the company no responsibility shall rest on the company, or the liquidators, or any person to whom the custody of the books and papers has been committed, by reason of the same not being forthcoming to any person claiming to be interested therein." If a liquidator has any moneys repre senting unclaimed or undistributed assets of the company which have remained in his hands for six months after the date of their receipt, he shall pay the same to the Com panies Liquidation Account at the Bank of England. Any person claiming to be en titled to any of such moneys may apply to the Board of Trade for payment of the same.