公司法和商法雙語講義第23章CorporateandBusinessLawChapter23

1、23 InsolvencyOverviewINSOLVENCYCompulsoryVoluntaryCreditorsMembersInsolvency of a company usually results in liquidation eithercompulsory orvoluntary . Liquidation may be avoided by administration. Liquidation may also be entered into whilst a company is still solvent.2 Administration ordersPurpose

2、of administration2.1 (a) The appointment of an administrator is designed to give companies in financial difficulty (usually with insolvency looming) a“ breathingspace ” from which to trade out of their difficulties.(b) Administrators may be appointed either bythe court, the holders offloating charge

3、s created on or post 15.9.03 and the company and its directors.(c) If the company and its directors intend to appoint an administrator they must give five days notice to any floating charge holder entitled to appoint either an administrative receiver or administrator. This effectively means that a f

4、loating charge holder can either block the company s choic e of administrator or block the administration procedure.(d) The administrator once appointed must perform his functions with theobjective of:(i) rescuing the company as a going concern, or(ii) achieving a better result for the company s cre

5、ditors than winding up; or(iii) realising property to distribute tosecured or preferentialcreditors.Consequences of the appointment of an administrator2.2 (a) Winding-up cannot be commenced or continued with.(b) No goods can be recovered from the company (e.g. H.P. repossessions) without court leave

6、.(c) Legal proceedings can only be commenced or continued with the courts permission.Administrators proposals and powers2.3 (a) The administrator should:(i) Establish the state of the company s affairs by noibntga iastatement of affairs.(ii) Prepare proposals to achieve the aim of administration.(b)

7、 A creditors meeting must be called within 10 weeks of administrators appointment.(c) The meeting will(i) accept;(ii) accept with modifications which must be approved by theadministrator; or(iii) reject.Powers2.4 (a) The administrator has general powers of management derived from.(b) He can(i) appoi

8、nt and remove directors (a unique power in company lawnormally only available in an AGM)(ii) call meetings of the members and creditors(iii)apply to court for directions regarding the carrying out of hisfunctions(iv)make payments to secured or preferential creditors and with the courts permission ma

9、ke payments to unsecured creditors(e) He must summon a m eeting of the companys creditors if told to by:(i) the court, or(ii)10% of the companys creditors. s.17(IA)End of administration2.5 (a) The administration has been successful.(b) Automatically (unless extended) 12 months after the date of appo

10、intment.(c) By court order which includes the granting of a winding up petition on public interest grounds.3 Liquidation3.1 Liquidation may takeone of two forms:(i) Winding up by the court Compulsory liquidation.(ii) Voluntary Winding Up Members or Creditors .Winding up by the court3.2 (a) s.122(1)(

11、IA) Reasons for which a company may be put into compulsoryliquidation:-(i) The company has passed a special resolution to that effect.(ii) The company was regarded as a public company onincorporation and not issued with as.117 certificate within 1year.(iii) The company does not start business within

12、 one year of incorporation or suspends business for one year.(iv) The total number of members in a public company is reduced below the legal minimum. (i.e., 2)(v) The company is unable to pay its debts.(vi) The court is of the opinion that it is just and equitable that it should be wound up.(b) s.12

13、3(IA) Unable to pay its debts (Creditors petition)There are four ways of proving that a company is unable to pay itsdebts:(i) A creditor has served on a written demand for 750 or more onthe company, and the company has failed to pay within a period of 21 days.(ii) A creditor has sued the company and

14、 obtained judgement butremains unpaid.(iii) The company is insolvent on the balance sheet test (liabilities exceed assets)(iv) The company is insolvent on the commercial insolvency test (i.e. it is unable to pay its debts as they fall due because it lack cash).(c) s.122(1)g Just and equitable (membe

15、rs petition)Cases where the court has held that it is just and equitable to wind up include:-(i) where the company s main object has failed : Re German DateCoffee Company.(ii) where there is deadlock in the management:Re Yenidje TobaccoCompany.(iii) where a director of a partnership company is remov

16、ed under s.303 : Ebrahimi v. Westbourne GalleriesMembers must stand to gain something from liquidation (the company must not be insolvent).(d) The court will appoint the Official Receiver as liquidator (he will pass on the role quickly) and encourage the formation of a liquidation committee.(e) Comp

17、ulsory liquidation is rare most frequently a hostile act fromcreditors.Members voluntary winding up3.3 (a) Company is solvent.(b) Directors meeting at which it is resolved that(i) EGM will be called;(ii) members voluntary winding up be recommended to themembers;(iii) statutory declaration of solvenc

18、y sworn.(c) Contents of the Statutory Declaration of Solvency:(i) Directors must declare that the company will be able to pay itsdebts in full within 12 months .(ii) It must be supported by astatement of assets and liabilities as atthe latest possible date.(iii) The declaration must be made within 5

19、 weeks before the Special Resolution is passed and must be filed with the Registrarwithin15 days of it being passed.(iv) Penalties : If debts are not paid within 12 months it is assumed that the directors had no grounds for making the declaration. Directors can be fined and imprisoned.(d) Extraordin

20、ary General Meeting:Creditors3.4 (a)(b)(c)(d)(e)(i) Special resolution to wind the company up under the memberssupervision , s.91(IA).(ii) Ordinary resolution to appoint a liquidator.(iii) Ordinary resolution to fix the liquidator s remuneration.(iv) If the liquidator (at any time) feels the company

21、 will not be able to meet its debts he must: summon a meeting of creditors present them with a balance sheet convert the winding up into a Creditors VoluntaryWinding Up. s.95(IA). voluntary winding upDirectors meeting at which it is resolved that:(i) EGM will be called;(ii) creditors voluntary windi

22、ng up be recommended to the members;(iii) meeting of creditors be called;(iv) director to chair the creditors meeting appointed;(v) a statement of affairs be sworn.Shareholders meeting:(i)Extraordinary resolution (75%) to wind up the company on thegrounds it cannot pay its debts is passed;(ii) Ordin

23、ary resolution to appoint a liquidator is also passed.Creditors meeting:(i) The company mus t call a creditors meeting within 14 days ofthe EGM;(ii) Notice must be sent by post to creditors. It must also be placed in the London Gazette and two local newspapers.At the creditors meeting the directors

24、must produce:(i)A full statement ofthe company s affairs(ii) A list of creditors together with the estimated amount of the claims.Creditors and members nominate a liquidator; the creditors prevails: s.100(IA)A Liquidation Committee may be appointed which has three purposes:choice(i)To assist the liq

25、uidator as a representative body;(ii) To keep an eye on him;(iii) To give the liquidator permission to exercise certain powers (e.g., paying off a certain class) thus removing the need to call a full meeting every time a decision is made.OverviewOTHER POINTSEffect ofwinding upLiquidators powersDistr

26、ibution of assetsEffect of winding-up3.5 (a) All actions for recovery of debt against the company are stopped.(Action in tort will continue.)(b) The company will cease to carry on business except where it isnecessary for the beneficial winding-up of the company.(c) Directors continue in office but a

27、re stripped of power.(d) Employees automatically made redundant but can be re-employed.The liquidator s powers3.6 (a) Selling the assetsThe Liquidator may call in amounts due from contributories and/ordirectors in some circumstances:-(i) Secret profits e.g., made by directors from their positionRega

28、lHastings v. Gulliver.(ii) s.212(IA) Misfeasance : He can recover money improperly retained by promoters, directors, managers or officers of the company.(iii) s.213(IA) Fraudulent trading: Where a business has been carriedon with intent to defraud creditors in a winding up.(iv) s.214 (IA) Wrongful Trading:Where a director of the companyknew or ought to have concluded that there was no reasonable prospect that the company w