WINDING UP PETITION AND THE CONSEQUENCES

Protection of assets between petition and order

Stay of proceedings

The court has the discretionary power, on application of the company, a creditor or a contributory to stay or restrain other proceedings against a company at any time after the presentation of a winding up petition and before the making of a winding up order.

Commencement of winding up

When a winding up order is made by the court, the winding-up is deemed to have commenced from the time of the presentation of the petition (except where a resolution for voluntary winding-up had already been passed prior to such presentation, in which event the winding-up is deemed to have commenced at the time of passing the resolution).

Invalidation of dispositions

Unless the court orders otherwise, any disposal of the company’s property, alteration in the status of its members or transfer of shares after the commencement of the winding up is void. The purpose of this provision is to preserve the value of the assets of a company for the benefit of persons interested in those assets.

Advance Rulings 

If the company wishes to carry out a transaction after the presentation of the petition which may be subsequently rendered void on the making of a winding up order, it, or any interested person, may apply to the court for an advance, ruling as to whether that particular transaction would be sanctioned by the court in the event of an order being made (Re Levy (Holdings) Ltd [1964]

Provisional liquidators 

At any time after the presentation of the winding up petition the court may appoint the official receiver or an insolvency practitioner to be the provisional liquidator of the company. The primary reason for such appointment is usually to safeguard the assets pending the winding up hearing. Since an appointment anticipates the making of a winding-up order, it is usually made only with the consent of the company itself or in a clear case of insolvency. 

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