Q&As

In a creditors' voluntary liquidation, if there is a gap between the general meeting and section 98 meeting, what powers does the liquidator appointed by the members have? Can he sell the assets of the company? If so, does this transaction need to be approved by creditors at the section 98 meeting?

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Published on LexisPSL on 29/07/2015

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • In a creditors' voluntary liquidation, if there is a gap between the general meeting and section 98 meeting, what powers does the liquidator appointed by the members have? Can he sell the assets of the company? If so, does this transaction need to be approved by creditors at the section 98 meeting?
  • When does the liquidator's appointment take effect in a creditors' voluntary liquidation?
  • What are the liquidator’s powers if appointed prior to the creditors' meeting?
  • Duty to report to creditors

When does the liquidator's appointment take effect in a creditors' voluntary liquidation?

A creditors' voluntary liquidation (CVL) usually commences at the time of the passing of the resolution for voluntary winding up (see section 86 of the Insolvency Act 1986 (IA 1986) and Re Norditrack (UK)). As you have identified, although as a matter of practice the members meeting which passes a resolution to wind up a company usually takes place immediately before the creditors' meeting (IA 1986, s 98) on the same day, there is statutory provision for there to be a gap of up to 14 days between the members' meeting and the creditors' meeting.

What are the liquidator’s powers if appointed prior to the creditors' meeting?

If the meetings do occur on different days, there will be a short period when a liquidator has been appointed by the members but not yet confirmed by the creditors. As such, his powers are extremely limited by IA 1986, s 166, which provides as follows:

'[(1A) The exercise by the liquidator of the power specified in paragraph 6 of Schedule 4 to this Act (power to sell any of the company's property) shall n

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