Liquidation Part Two Flashcards
What are the main categories under the ‘just and equitable’ ground for winding up a company?
Quasi-partnership breakdown, Deadlock in management, Failure of substratum, Illegal or fraudulent purpose, Corporate instrument of fraud, Broad residual category
What is a quasi-partnership breakdown in company law?
When mutual trust/confidence collapses in a small private company, typically family-run or friend-based.
e.g. Re Murph’s Restaurant.
What is deadlock in management?
When equal shareholders/directors are in irreconcilable disagreement and cannot cooperate.
e.g. Re Yenidje Tobacco Co.
What is the failure of substratum?
When the company’s core objective fails or becomes impossible.
e.g. Re German Date Coffee Co.
When can a company be wound up for illegal or fraudulent purpose?
When the company’s formation or operations are unlawful or intended to defraud.
e.g. R v Registrar (Irish Sweepstakes case).
What case supports winding up where incorporation is used to defraud?
Re Shrinkpak Ltd – a new company diverted funds from a liquidating company.
What did Ebrahimi v Westbourne Galleries say about equitable rights?
Courts can override legal rights where personal obligations of trust and mutual understanding are broken.
What is required from a petitioner under the just and equitable ground?
They must come with clean hands – no misconduct causing the breakdown.
When can oppression of minority shareholders justify winding up?
Under s.212 CA 2014, if directors act oppressively or disregard member interests.
Who can petition for winding up under s.571 CA 2014?
The company, Creditors (including prospective ones), Contributories, Corporate Enforcement Authority (public interest).
What must a winding-up petition include?
Incorporation date, office address, share capital, company objects, and grounds for winding up.
What happens after a winding-up order is granted?
Liquidator appointed, Legal proceedings halted, Asset transfers void, Directors’ powers cease, Floating charges crystallise, Employees dismissed.
What is a contribution order under s.599 CA 2014?
Allows related companies to be ordered to contribute to debts if they caused or mismanaged the wound-up company.
What is a pooling order under s.600 CA 2014?
Winding up related companies together as one and distributing assets equally among creditors.
What fiduciary duty does a liquidator owe?
To act in the company’s interest, not for personal gain (no secret profits).
as per Knowles v Scott.
What statutory duties does a liquidator owe?
To members (e.g., call meetings if insolvency likely), To creditors (e.g., reports and meetings), To the CEA (e.g., misconduct reports, restriction applications).
What general powers does a liquidator have?
Sell assets, appoint agents, mortgage property, sue, and take control of company property.
What powers require court or committee approval?
Bringing legal action, carrying on business, paying a creditor class in full, settling or compromising claims.
