In today’s blog post we will look at the area of Liquidations which can take a number of forms such as (a) Member’s Voluntary Liquidation (b) Creditor’s Voluntary Liquidation and (c) Court Ordered Liquidation.
(a) Member’s Voluntary Liquidation
In order to apply for a Member’s Voluntary Liquidation, the Company must be solvent. The procedure is set out under Section 201 and 202 of the Companies Act 4004 (as amended).
A declaration of solvency must be completed by all or majority of the Directors. The declaration comprises of assets and liabilities not more than three months before the date of making the declaration and it must be completed at a meeting of directors not earlier than 30 days before the shareholder’s meeting/resolution. The member’s must pass a special resolution to wind up and appoint a liquidator and the resolution must be advertised in Iris Oifigiuil within 14 days after the passing of the resolution. In the event that the liquidator cannot discharge company debt within 12 months, the liquidation can be converted to a Creditors Voluntary Liquidation.
(b) Creditor’s Voluntary Liquidation
It should be noted that despite the name, a creditor cannot instigate a Creditor’s Voluntary Liquidation.
In this case the director’s conclude that a company should be voluntarily liquidated where it is insolvent and can no longer pay it’s debts as they fall due. There must be a resolution of the board of directors to implement and appoint a liquidator. A meeting of shareholder’s takes place and an ordinary resolution is passed to wind up the company under Section 586(2) of the Companies Act 2014. The Notice of the Creditor’s Meeting must be advertised at least ten days before the date of the meeting, in two daily newspapers circulating in the district of the registered office of the company.
The liquidation is deemed to have commenced at the date of passing of the resolution for the winding up of the Company and notice of the passing of the resolution must be advertised in Iris Oifiguil within 14 days. Certain forms need to be filed with the Companies Registration Office and three month’s after the documents are filed, the company is deemed to be dissolved. A dissolution can be voided within two year’s under Section 708 of the Companies Act 2014.
(c) Court Liquidation – Chapter 2, Part 11 of the Companies Act 2014
In this case the High Court is petitioned to have a company compulsory would up. This process is subject to strict procedural steps with regular court oversight of the process.
There are several parties who have locus standi or power to petition the court including the company itself, a creditor of the Company (most common), a contributory of the company and the Director of Corporate Enforcement.
The procedure is set down in Order 74 of the Rules of the Superior Courts and is commenced by way of petition which is filed with the Central Office and verified on Affidavit. At the petition hearing, the Court may (a) put the company into liquidation and appoint an Official Liquidator, adjourn the hearing conditionally or unconditionally or make an interim order or any other order that it deems fit.The winding up or dissolution of the company can be again voided under Section 708 of the Companies Act 2014 (as amended).
What are the Liquidator’s Duties?
In general a liquidator takes control of the Company seal, books and all property of the company. His job is to realise company assets and apply the proceeds of payment of company’s debts and liabilities in proper priority and in accordance with the Companies Acts. The Liquidator can report on the conduct of the Directors to the Office of the Director of Corporate Enforcement as well as reporting criminal offences.
What are Liquidator’s Powers?
A liquidator can both bring and defend legal proceedings, carry out the business of the company including executing documents on the company’s behalf. He can also investigate the transactions of the company and apply to impose personal liability on directors.
It should be remembered that liquidation does not preclude from the appointment of a receiver and vice versa.
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