The following Restructuring & Insolvency practice note Produced in partnership with Eleanor Holland and Karl Anderson of 4 Stone Buildings provides comprehensive and up to date legal information covering:
This Practice Note sets out guidance as to what happens when:
proceedings have been commenced against a company and a winding-up petition is presented against the company
the company's members pass a resolution to wind it up through a creditors' voluntary liquidation
Any formal insolvency proceeding is a collective remedy. This means that all unsecured creditors rank equally. A judgment obtained in any proceedings against the company does not create any form of priority over other creditors in the same class. Nor is a judgment any form of security. It follows that the decision whether to continue proceedings against a company which is being wound up is primarily a commercial one rather than a legal one. There is frequently no commercial advantage in incurring further legal costs against an insolvent company. For further detail see Proof of debt—overview.
It should also be borne in mind that any disposition of any company property after the presentation of a winding-up petition is void under section 127 of the Insolvency Act 1986 (IA 1986) unless:
it is validated by the court
any payment is made utilising third party f
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