Security. Appointment by the Court. Effect of order of Court for winding-up subject to supervision. Restrictions. Powers of liquidators. Where in a voluntary winding-up the shareholders have not required security from a liquidator appointed by them, the Court will not require security from a substituted liquidator appointed by the Court after a supervision order has been made (a). Where the contributories, on passing a resolution for winding up voluntarily, did not, at the proper time, exercise their right of appointing a liquidator, the Court, on making a supervision order, appointed one, and the Court of Appeal refused to interfere with the discretion of the primary judge (b). 151. Where an order is made for a winding-up subject to the supervision of the Court (a), the liquidators appointed to conduct such winding-up may, subject to any restrictions imposed by the Court, exercise all their powers, without the sanction or intervention of the Court, in the same manner as if the company were being wound up altogether voluntarily (B); but, save as aforesaid, any order made by the Court for a winding up subject to the supervision of the Court shall for all purposes, including the staying of actions, suits, and other proceedings (y), be deemed to be an order of the Court for winding up the company by the Court, and shall confer full authority on the Court to make calls (8), or to enforce calls made by the liquidators, and to exercise all other powers which it might have exercised if an order had been made for winding up the company altogether by the Court; and in the construction of the provisions whereby the Court is empowered to direct any act or thing to be done to or in favour of the official liquidators, the expression official liquidators shall be deemed to mean the liquidators conducting the winding-up subject to the supervision of the Court. "Subject to any restrictions imposed by the Court." In In re London Quays and Warehouses Co. (c) the liquidator was appointed "to conduct the winding-up of the company, subject to such restrictions as an official liquidator would in a compulsory winding-up be subject to, except so far as the Court may, upon an application for that purpose, modify or dispense with such restrictions in any case or class of cases." This section preserves to the liquidator, when a supervision order is made, the same powers as he had in the voluntary winding-up, but (a) Re European Bank, Ex parte Paul, 19 W. R. 26. (b) Re London Quays and Warehouses Co., L. R. 3 Ch. 394. (c) L. R. 3 Ch. 394. enables the Court to restrict them if it thinks fit. Unless, therefore, the Court have given any directions restricting the exercise of his powers, the sanction of the Court will not be necessary to render valid any arrangement which, in a purely voluntary winding-up, might have been entered into with the sanction of a general meeting (sect. 139); and to this extent sect. 160 must be looked upon as cumulative upon, not as restrictive of, sect. 139 (a). in certain cases of voluntary liquidators to liquidator. office of official 152. Where an order has been made for the winding-up of Appointment a company subject to the supervision of the Court (a), and such order is afterwards superseded by an order directing the company to be wound up compulsorily (8), the Court may in such last-mentioned order, or in any subsequent order, appoint the voluntary liquidators or any of them, either provisionally (7) or permanently, and either with or without the addition of any other persons, to be official liquidators. A compulsory order will, in general, continue the voluntary liquidators as official liquidators (b). Where a supervision order is superseded by a compulsory order, the winding-up will date from the commencement of the winding-up under supervision, i.e., from the resolution to wind up voluntarily, not from the presentation of the petition. Accordingly, where five months after the commencement of a voluntary winding-up two petitions were presented, the one asking for a supervision order, and the other for a compulsory order, the Court, being of opinion that the winding-up ought to be compulsory, but not wishing to alter the date of its commencement, made a supervision order on the first petition, and an order dated the following day on the second petition for a compulsory winding-up (c). Supplemental Provisions. 153. Where any company is being wound up by the Court or subject to the supervision of the Court, all dispositions of the property, effects, and things in action of the company, and every transfer of shares, or alteration in the status of the members of the company, made between the commencement of the winding-up (a) and the order for winding up, shall, unless the Court otherwise orders, be void (8). (a) ss. 84, 130. (a) Wright's Case, L. R. 5 Ch. 437. (b) Re London and Mediterrancan Banking Co., 15 W. R. 33. (B) Conf. ss. 114, 131, 163. (c) In re United Service Co., L. R. 7 Eq. 76; and see s. 146. P Commencement of winding-up where supervision order superseded by compulsory order. Dispositions after the com mencement of the winding-up avoided. Effect of section. Transfers of snares. In the case of a voluntary winding-up sect. 131 avoids all transfers, except as therein mentioned, or alteration in the status of the members of the company after the commencement of the winding-up. In the case of a company wound up by or under the supervision of the Court, a discretion is, by this section, reserved to the Court in setting aside the avoidance in the cases here mentioned. In both cases the business of the company is to come to an end, except so far as may be necessary for the beneficial winding up of the same (a). Sect. 114 (now repealed by 30 & 31 Vict. c. 47, s. 1), by constituting a winding-up petition when registered a lis pendens, affected the real estate of the company, while this section affects all alienations both of its real and personal estate (b). The words of this section are very wide, and properly so, to prevent, in the interval which must necessarily elapse between the presentation and the hearing of a petition, the improper alienation and dissipation of the property of the company. But the words at the end of the section are necessarily introduced in order to give the Court a discretion to say that a transaction which is, in its opinion, perfectly fair and bona fide shall stand. Without such a discretion given to the Court it would be open to any one by the mere presentation of a petition, whether well-founded or merely groundless and malignant, to paralyse ipso facto the trade of the company, and effectually work its ruin. In the case of a voluntary winding-up no such considerations arise, as the winding-up takes its origin from the voluntary action of the shareholders. It is not necessary that the sanction of the Court should be obtained at the time of the transaction which it is sought to establish (c). Thus the Court may establish bonâ fide transfers of shares made and completed, in ignorance of the presentation of a petition, between the commencement of the winding-up and the order for winding up (d). But a vendor of shares cannot profess ignorance of the petition after it has been advertised, the advertisement is notice to all the world (e). A contract for the purchase of shares entered into before the presentation of the petition is not rendered void by its presentation (ƒ); neither is such a contract void if entered into in the interval between the presentation of and the order on the petition (g); and in the case last referred to it was held that a transfer could be made after the winding-up order. (a) ss. 131, 95. (b) In re Barned's Banking Co., Ex (d) Emmerson's Case, L. R. 2 Eq. 231; concerned, completed before the commencement of the winding-up, and the question was only one of registration by the company, as to which see further, s. 35. (e) Emmerson's Case, L. R. 2 Eq. 231. (f) Chapman v. Shepherd, Whitehead v. Izod, L. R. 2 C. P. 228; and see s. 131 as to a voluntary winding-up. (g) Rudge v. Bowman, L. R. 3 Q. B. 689. In Gibbs and West's Case (a) a charge upon certain calls was given Disposition of by the directors of a company between the commencement of the wind- property. ing-up and the order, and was confirmed by the Court under this section, the Court being of opinion that it was bonâ fide given to prevent the ruin of the company. Transactions in the ordinary course of the trade of a company, bonâ fide entered into and completed before the winding-up order will always, in the discretion given to the Court, be maintained; but to transactions which at the date of the winding-up order rest only in contract, this section has no application; in such a case the person with whom the contract is entered into can claim only pari passu with the rest of the creditors of the company. Thus, where after the presentation of a petition, of which the company were aware, but P. was ignorant, P. contracted with an iron company to supply him with, and paid for, iron, and the disposition of the property was complete before the winding-up order, P. was allowed to retain the iron (b). The C. Company took a transfer of shares in the B. Company, and sent in the transfer for registration. In the interval between sending in the transfer and the actual registration a petition was presented to wind up the C. Company, upon which an order was afterwards made. The registration was held not to be affected by this section, as not being a disposition of the property of the C. Company within its meaning (c). After a petition had been presented for winding up a company, a Alteration of shareholder, with knowledge of the petition, on the proposal of the status. directors, advanced a sum of money on the arrangement that if the company should be able to go on, such sum should be treated as a loan; but if it were wound up, should be taken as paid on account of capital unpaid on his shares. An order was afterwards made on the petition; and it was held that such an arrangement was invalid as an alteration in the status of the member, and that he was not entitled to treat the amount as paid upon his shares (d). As to a shareholder who, being an infant at the commencement of the winding-up, subsequently attains his majority, see sects. 22, 131. A petition was presented to wind up an unregistered company. The company was then registered, the registrar not being informed of the presentation of the petition; subsequently an order was made on the petition. It was held that the registration was a nullity, and that the company was being wound up as an unregistered company (e). 154. Where any company is being wound up, all books, accounts, and documents of the company and of the liqui (a) L. R. 10 Eq. 312. (b) In re Wiltshire Iron Co., Ex parte Pearson, L. R. 3 Ch. 443. (c) In re Barned's Banking Co., Ex parte Contract Corporation, L. R. 3 Ch. 105. (d) In re Oriental Commercial Bank, Barge's Case, L. R. 5 Eq. 420; and see note to s. 25. (e) In re Hercules Insurance Co., L. R. 11 Eq. 321. Registration of an unregistered company. The books of be evidence. the company to As to disposal of books, accounts, and documents of the company. Inspection of books. Order, when made. dators shall, as between the contributories of the company, be primâ facie evidence of the truth of all matters purporting to be therein recorded. 155. Where any company has been wound up under this Act and is about to be dissolved (a), the books, accounts, and documents of the company and of the liquidators may be disposed of in the following way: that is to say, where the company has been wound up by or subject to the supervision of the Court, in such way as the Court directs, and where the company has been wound up voluntarily, in such way as the company by an extraordinary resolution (8) directs; but after the lapse of five years from the date of such dissolution, no responsibility shall rest on the company or the liquidators, or any one to whom the custody of such books, accounts, and documents has been committed, by reason that the same or any of them cannot be made forthcoming, to any party or parties claiming to be interested therein. 156. Where an order has been made for winding up a company by the Court or subject to the supervision of the Court, the Court may make such order for the inspection by the creditors and contributories of the company of its books and papers as the Court thinks just, and any books and papers in the possession of the company may be inspected by creditors or contributories in conformity with the order of the Court, but not further or otherwise (a). (a) Sch. 1, Table A., Art. (78). As to the documents relating to the wind ing-up, see Gen. Order, Nov. 1862, Rule 58. The N. Company transferred its business to the O. Company, and all the books of the former company were handed over to the latter, but no provision was made for the liquidation of the debts of the N. Company. Both companies being subsequently wound up by orders made in different branches of the Court, upon motion by the official liquidator of the N. Company, that the books of that company should be delivered up to him by the official liquidator of the O. Company, it was ordered that these books should be produced to him at all reasonable times at the chambers of the judge by whom the order for winding up the O. Company was made (a). Special circumstances must generally be shewn in order to obtain an (a) Re National Financial Co., 15 W. R. 499. |