Essay on Winding Up of Company

725 Words Jul 13th, 2011 3 Pages
Types of Winding-up
There are two types of winding-up - compulsory and voluntary (s.73 (1) IA 1986)
a) Compulsory Winding-up
s.122 (1) & s.125 IA 1986 - judicial discretion
s.122 (1) contains 7 grounds for compulsory winding up:
1) If there is a special resolution by the company that it be wound-up by the
Court;
2) A company which has been registered, but not issued with a certificate to
Conduct business;
3) An old company ("old" has a special meaning within the legislation, but is beyond the scope of this course);
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4) The company has not started to trade or conduct business within 12 months
Of its incorporation;
5) The number of members is reduced to 2 (unless it is a private company);
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Re ABC Coupler & Engineering Ltd [1961] 1 All ER 354
In this case, a creditor had a debt of £17,500. In order to try and get back some of the money he petitioned the court for a winding-up order. There was a number of other creditors, and all of them opposed the compulsory winding-up. This was considered of importance by the courts. Also considered important was that the company had extensive goodwill. The court also looked at the fact that although the company was money poor, it was asset rich - its assets were extensive and would more than cover the liabilities. For these reasons, the creditor was denied his petition for winding-up.
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b) Voluntary Winding-up
There are two types of voluntary winding-up:
1) members voluntary winding-up - largely under control of members - where directors swear a statutory declaration of solvency
2) creditors voluntary winding-up - largely under control of creditors - where directors failed to swear a statutory declaration of solvency
With respect to a creditors voluntary winding-up, a meeting of creditors will be called, and they will appoint a liquidator and they can also appoint, if they should so wish, creditors representatives to sit on the liquidation committee.
In the case of a members voluntary winding-up, there will be a meeting of members, and possibly contributors, and they will have to

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