Liquidation Part One Flashcards
What is liquidation?
The process of winding up a company by gathering, realising, and distributing its assets, leading to its dissolution.
What are the three main types of winding up?
Compulsory liquidation (court-ordered)
Voluntary liquidation (members’ or creditors’)
Striking off (administrative, not formal liquidation)
Who oversees a compulsory liquidation?
The High Court appoints an official liquidator who acts as an officer of the court.
What are the grounds for a compulsory winding up under s.569 CA 2014?
Special resolution
Failure to start or resume business
No surviving members
Inability to pay debts
Just and equitable grounds
Oppressive conduct
Public interest
Other statutory grounds (e.g., s.535(2), s.542(5))
What are the tests for insolvency under s.570 CA 2014?
Cash Flow Test: inability to pay debts as they fall due
Balance Sheet Test: liabilities exceed assets
What presumption arises if a company doesn’t pay a creditor over €10,000 within 21 days?
That the company is unable to pay its debts and may be subject to liquidation.
Can a creditor use a winding-up petition as a debt collection tool?
No – it is considered an abuse of process if used improperly.
What happens if the company disputes the debt?
If the dispute is bona fide and on substantial grounds, the court will not order liquidation.
What are some leading cases where petitions were refused due to disputed debt?
Re Pageboy Couriers
Stonegate v Gregory
Re ICT Intl Cotton
Re Emerald Portable
Re WMC (No.2)
What is the “just and equitable” ground for winding up?
Broad discretion for court; often used where there is management deadlock, failure of purpose, or fraud.
When can an injunction stop a winding-up petition?
When the company shows a prima facie case of abuse of process or substantial defence.
Can majority creditor opposition stop liquidation?
Yes, if they have good reason (e.g. expectation of repayment, ongoing restructuring).
What did Re Genport establish about court discretion?
That the court may refuse liquidation even if the company is insolvent if liquidation would harm the value of its assets.
What are quasi-partnership breakdown and deadlock used for?
As just and equitable grounds for winding-up a company under s.569(1)(e).
What if a voluntary liquidation has already begun?
Court may refuse compulsory winding-up unless prejudice to creditor is proven (Re George Downs & Co).
