The Examiner’s Office continues to assist the court in the supervision of pre-2014 Companies Act liquidations with particular regard towards bringing them to a timely conclusion and the bringing of applications for final orders before the court.
The information set out below relates to pre-2014 Act court liquidations.
Court liquidations
The High Court has an extensive jurisdiction to wind up companies and appoint official liquidators. The most usual way companies are wound up by the court is where a petition is presented by a creditor on foot of an unpaid debt.
A petition to wind up a company is presented in the Central Office of the High Court to one of the registrars who appoints the time and place at which the petition is to be heard.
The winding up order
On making an order to wind up a company the court usually appoints an official liquidator and makes a number of ancillary orders.
Proceeding before the Examiner
When the High Court makes an order for the winding up of a company the official liquidator or his agent is required to issue a Notice to Proceed.
This notice, which is served on the parties who appeared at the hearing of the petition for the winding up, gives a date (called a return date) for a hearing before the Examiner of the High Court.
The role of the Official Liquidator
The official liquidator is charged with the preservation, realisation and distribution of the company's assets. All monies received by the official liquidator are usually required to be paid by him into an account in the Bank of Ireland at its branch at 2 College Green to an account held in the joint names of the official liquidator and the examiner.
The powers and duties of an official liquidator are set out in section 231 of the Companies Act 1963. The powers set out in subsection (1) can be exercised by the official liquidator with the sanction of the court or of the Committee of Inspection.
Those contained in subsection (2) can be exercised by the official liquidator without such consent but he may decide, for his own protection, apply to the court for approval for the exercise of those powers in any particular case.
Subsection (3) provides that the exercise by the official liquidator in a winding up by the court of the powers conferred by this section shall be subject to the control of the court and any creditor or contributory may apply to the court in relation to any exercise or proposed exercise of any of these powers.
Pursuant to subsection (4), the court may provide by any order that the official liquidator may, where there is no committee of inspection, exercise some of the powers mentioned in subsection (1) without the sanction or intervention of the court. In most cases where there are any assets at all there will be a number of applications by the official liquidator to the court for approval of the exercise of powers or directions as to how others should be exercised.
Interim applications for payments in respect of the official liquidators remuneration and his legal costs and for liberty to make distributions to creditors are frequently made during the course of a liquidation.
Restriction of directors - section 150 Companies Act 1990
This section effectively provides that where a company is insolvent, the persons who have been directors of the company within twelve months next preceding the commencement of the liquidation are to be restricted from acting as directors or officers of a company for a period of five years unless the court is satisfied that they acted honestly and responsibly.
The court will require official liquidators to bring an application under the section in cases where the company is insolvent so as to enable the court exercise its function. The current practice is to list those applications for hearing at the commencement of each court term.
Notice of the names of those directors restricted under the section is given to the Registrar of Companies who maintains a register of the directors affected. Such notice is given in a prescribed form by a prescribed officer.
The Examiner and Registrars of the High Court are prescribed officers for the purpose of section 150.
The completion of the winding up
When all the assets of the company which is in liquidation are realised, the official liquidator applies to the court for a Final Order. This order usually includes provision for any outstanding costs and expenses of the liquidation and the costs and remuneration of the official liquidator or any balance thereof.
Where there are sufficient funds the order directs that the balance of the assets be distributed amongst the creditors of the company (after taking into account any interim payments which have made by order of the court in the course of the liquidation) in the priorities as determined by law. Any surplus remaining after the payment in full of the creditors and the interest due to the contractual creditors is distributed amongst the shareholders of the company.
The order also provides for the vacation of the Official Liquidators Bond upon the production to the proper officer in the Central Office of the Examiners Certificate to the effect that the affairs of the company have been completely wound up and the dissolution of the company upon the filing of that certificate with the Registrar of Companies.
The relevant legislation
Employees (Employers Insolvency) Act 1984
Building Society Act 1989
Social Welfare (Consolidation) Act 1993
Investment Intermediaries Act 1995
Investors Compensation Act 1998
Rules of the Superior Courts 1986 (S.I. No. 15 of 1986)
Rules of the Superior Courts (No. 3) 1991 (S.I. No. 147 of 1991)
Rules of the Superior Courts (No. 4) 1991 (S.I. No. 228 of 1991)
Rules of the Superior Courts (No. 2) 1991 (S.I No. 265 of 1993)
Rules of the Superior Courts (No. 1) 1994 (S.I. No. 191 of 1994)
Companies Act 1990 (Parts IV and VII) Regulation 1991 (S.I. No. 209 of 1991)