Companies Act 1985

• (1) When a winding-up order has been made by the court in England and Wales, and separate meetings of creditors and contributories have been summoned for the purpose of determining whether an application should be made to the court for the appointment of a liquidator in place of the official receiver, it is the business of those meetings to determine further whether or not an application is to be made to the court for the appointment of a committee of inspection to act with the liquidator, and who are to be members of the committee if appointed.

• (2) In Scotland, when a winding-up order has been made by the court, the liquidator shall summon separate meetings of the company's creditors and contributories for the purpose of determining whether or not an application is to be made to the court for the appointment of a committee of inspection and who are to be the members of the committee if appointed.

However, if the winding-up order has been made on the ground that the company is unable to pay its debts, it is not necessary for the liquidator to summon a meeting of the contributories.

• (3) The court may make the appointment and order required to give effect to such determination ; and if there is a difference between the determinations of the meetings of the creditors and contributories in respect of the matters referred to above, the court shall decide the difference and make such order on those matters as the court may think fit.

Constitution and proceedings of committee of inspection

547

• (1) Subject as follows, the committee of inspection (if appointed) shall consist of creditors and contributories of the company or persons holding general powers of attorney from creditors or contributories in such proportions as may be agreed on by the meetings of creditors and contributories or as, in case of difference, may be determined by the court

• (2) In Scotland—

• (a) if a winding-up order has been made on the ground that the company is unable to pay its debts, the committee shall consist of creditors or persons holding general powers of attorney from creditors, and

• (b) the committee has, in addition to the powers and duties conferred and imposed on it by this Act, such of the powers and dudes of commissioners on a bankrupt estate as may be conferred and imposed on committees of inspection by general rules.

• (3) Schedule 17 has effect with respect to the committee of inspection and its proceedings.

Power of Secretary of State to act in place of committee

548

If in the case of a winding up in England and Wales there is no committee of inspection, the Secretary of State may, on the application of the liquidator, do any act or thing or give any direction or permission which is by this Act authorised or required to be done or given by the committee.

General powers of court in case of winding up by the court

Power to stay or sist winding up

549

• (1) The court may at any time after an order for winding up, on the application either of the liquidator or the official receiver or any creditor or contributory, and on proof to the satisfaction of the court that all proceedings in the winding up ought to be stayed or sisted, make an order staying or sisting the proceedings, either altogether or for a limited time, on such terms and conditions as the court thinks fit.

• (2) The court may, before making an order, require the official receiver to furnish to the court a report with respect to any facts or matters which are in his opinion relevant to the application.

• (3) A copy of every order made under this section shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the registrar of companies, who shall enter it in his records relating to the company.

Settlement of list of contributories and application of assets

550

• (1) As soon as may be after making a winding-up order, the court shall settle a list of contributories, with power to rectify the register of members in all cases where rectification is required in pursuance of this Act, and shall cause the company's assets to be collected, and applied in discharge of its liabilities.

• (2) If it appears to the court that it will not be necessary to make calls on or adjust the rights of contributories, the court may dispense with the settlement of a list of contributories.

• (3) In settling the list, the court shall distinguish between persons who are contributories in their own right and persons who are contributories as being representatives of or liable for the debts of others.

Delivery of property to liquidator

551

The court may, at any time after making a winding-up order, require any contributory for the time being on the list of contributories and any trustee, receiver, banker, agent or officer of the company to pay, deliver, convey, surrender or transfer forthwith (or within such time as the court directs) to the liquidator any money, property or books and papers in his hands to which the company is prima facie entitled.

Debts due from contributory to company

552

• (1) The court may, at any time after making a winding-up order, make an order on any contributory for the time being on the list of contributories to pay, in manner directed by the order, any money due from him (or from the estate of the person whom he represents) to the company, exclusive of any money payable by him or the estate by virtue of any call in pursuance of this Act

• (2) The court in making such an order may—

• (a) in the case of an unlimited company, allow to the contributory by way of set-off any money due to him or the estate which he represents from the company on any independent dealing or contract with the company, but not any money due to him as a member of the company in respect of any dividend or profit and

• (b) in the case of a limited company, make to any director or manager whose liability is unlimited or to his estate the like allowance.

• (3) In the case of any company, whether limited or unlimited, when all the creditors are paid in full, any money due on any account whatever to a contributory from the company may be allowed to him by way of set-off against any subsequent call.

Power to make calls

553

• (1) The court may, at any time after making a winding-up order, and either before or after it has ascertained the sufficiency of the company's assets, make calls on all or any of the contributories for the time being settled on the list of the contributories to the extent of their liability, for payment of any money which the court considers necessary to satisfy the company's debts and liabilities, and tho costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, and make an order for payment of any calls so made.

• (2) In making a call the court may take into consideration the probability that some of the contributories may partly or wholly fail to pay it

Payment into bank of money due to company

554

• (1) The court may order any contributory, purchaser or other person from whom money is due to the company to pay the amount due into the Bank of England (or any branch of it) to the account of the liquidator instead of to the liquidator, and any such order may be enforced in the same manner as if it had directed payment to the liquidator.

• (2) All money and securities paid or delivered into the Bank of England (or branch) in the event of a winding up by the court are subject in all respects to the orders of the court.

Order on contributory to be conclusive evidence

555

• (1) An order made by the court on a contributory is conclusive evidence that the money (if any) thereby appearing to be due or ordered to be paid is due, but subject to any right of appeal.

• (2) All other pertinent matters stated in the order are to be taken as truly stated as against all persons and in all proceedings, except proceedings in Scotland against the heritable estate of a deceased contributory; and in that case the order is only prima facie evidence for the purpose of charging his heritable estate, unless his heirs or legatees of heritage were on the list of contributories at the time of the order being made.

Appointment of special manager (England and Wales)

556

• (1) Where in proceedings in England and Wales the official receiver becomes the liquidator of a company, whether provisionally or otherwise, he may, if satisfied that the nature of the company's estate or business, or the interests of the creditors or contributories generally, require the appointment of a special manager of the estate or business other than himself, apply to the court.

• (2) The court may on the application appoint a special manager of the company's estate or business to act during such time as the court may direct, with such powers (including any of the powers of a receiver or manager) as may be entrusted to him by the court.

• (3) The special manager shall give such security and account in such manner as the Secretary of State directs, and shall receive such remuneration as may be fixed by the court.

Power to exclude creditors not proving in time

557

The court may fix a time or times within which creditors are to prove their debts or claims or to be excluded from the benefit of any distribution made before those debts are proved.

Adjustment of rights of contributories

558

The court shall adjust the rights of the contributories among themselves and distribute any surplus among the persons entitled to it

Inspection of books by creditors and contributories

559

• (1) The court may, at any time after making a winding-up order, make such order for inspection of the company's books and papers by creditors and contributories as the court thinks just; and any books and papers in the company's possession may be inspected by creditors and contributories accordingly, but not further or otherwise.

• (2) Nothing in this section excludes or restricts any statutory rights of a government department or person acting under the authority of a government department.

Costs of winding up may be made payable out of assets

560

The court may, in the event of the assets being insufficient to satisfy the liabilities, make an order as to the payment out of the assets of the costs, charges and expenses incurred in the winding up in such order of priority as the court thinks just

Summoning of persons suspected of having company property, etc.

561

• (1) The court may, at any time after the appointment of a provisional liquidator or the making of a winding-up order, summon before it any officer of the company or any person known or suspected to have in his possession any property of the company or supposed to be indebted to the company, or any person whom the court deems capable of giving information concerning the promotion, formation, trade, dealings, affairs or property of the company.

• (2) The court may examine the officer or other person summoned on oath concerning those matters either by word of mouth or on written interrogatories, and may reduce his answers to writing and require him to sign them.

• (3) The court may require him to produce any books and papers in his custody or power relating to the company; but if he claims any lien on books or papers produced by him, the production is without prejudice to that lien, and the court has jurisdiction in the winding up to determine all questions relating to that lien.

• (4) If a person so summoned, after being tendered a reasonable sum for his expenses, refuses to come before the court at the time appointed, not having a lawful impediment (made known to the court at the time of its sitting and allowed by it), the court may cause him to be apprehended and brought before the court for examination.

Attendance at company meetings (Scotland)

562

In the winding up by the court of a company registered in Scotland, the court has power to require the attendance of any officer of the company at any meeting of creditors or of contributories, or of a committee of inspection, for the purpose of giving information as to the trade, dealings, affairs or property of the company.

Public examination of promoters and officers (England and Wales.)

563

• (1) Where an order has been made in England and Wales for winding up a company by the court, and the official receiver has made a further report under this Act stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company, or by any officer of the company in relation to it since its formation, the following applies.

• (2) The court may, after consideration of the report, direct (hat that person or officer shall attend before the court on a day appointed by the court for that purpose and be publicly examined as to the promotion or formation of the company, or the conduct of its business, or as to the conduct or dealings of that person as an officer of it.

• (3) The official receiver shall take part in the examination and for that purpose may, if specially authorised by the Secretary of State in that behalf, employ a solicitor with or without counsel.

• (4) The liquidator (where the official receiver is not the liquidator) and any creditor or contributory may also take part in the examination either personally or by solicitor or counsel.

Procedure under s. 563

564

• (1) On a public examination ordered by the court under section 563, the court may put such questions to the person examined as it thinks fit.

• (2) The person examined shall be examined on oath and shall answer all such questions as the court may put or allow to be put to him.

• (3) The person shall at his own cost, before his examination, be furnished with a copy of the official receiver's report, and may at his own cost employ a solicitor with or without counsel, who is at liberty to put to him such questions as the court may deem just for the purpose of enabling him to explain or qualify any answers given by him.

• (4) If the person applies to the court to be exculpated from any charges made or suggested against him, it is the duty of the official receiver to appear on the bearing of the application and call the court's attention to any matters which appear to him to be relevant; and if the court, after hearing evidence given or witnesses called by the official receiver, grants the application, the court may allow the applicant such costs as in its discretion it thinks fit.

• (5) Notes of a person's public examination shall be taken down in writing, and shall be read over to or by, and signed by, him and may thereafter be used in evidence against him, and shall be open to the inspection of any creditor or contributory at all reasonable times.

• (6) The court may, if it thinks fit, adjourn the examination from time to time.

• (7) The examination may, if the court so directs (and subject to general rules) be held before any Circuit judge, or before any officer of the Supreme Court being an official referee, master or registrar in bankruptcy, or before a district registrar of the High Court named for the purpose by the Lord Chancellor; and the powers of the court under this section may be exercised by the person before whom the examination is held.

Power to arrest absconding contributory

565

The court, at any time either before or after making a winding-up order, on proof of probable cause for believing that a contributory is about to quit the United Kingdom or otherwise to abscond or to remove or conceal any of his property for the purpose of evading payment of calls or of avoiding examination respecting the company's affairs, may cause the contributory to be arrested and his books and papers and movable personal property to be seized and him and them to be kept safely until such time as the court may order.

Powers of court to be cumulative

566

Powers conferred by this Act on the court are in addition to and not in restriction of any existing powers of instituting proceedings against a contributory or debtor of the company, or the estate of any contributory or debtor, for the recovery of any call or other sums.

Delegation of powers to liquidator (England and Wales)

567

• (1) Provision may be made by general rules for enabling or requiring all or any of the powers and duties conferred and imposed on the court in England and Wales by this Act in respect of the following matters—

• (a) the holding and conducting of meetings to ascertain the wishes of creditors and contributories,

• (b) the settling of lists of contributories and the rectifying of the register of members where required, and the collection and application of the assets,

• (c) the payment, delivery, conveyance, surrender or transfer of money, property, books or papers to the liquidator.

• (d) the making of calls,

• (e) the fixing of a time within which debts and claims must be proved,

to be exercised or performed by the liquidator as an officer of the court, and subject to the court's control.

• (2) But the liquidator shall not, without the special leave of the court, rectify the register of members, and shall not make any call without either that special leave or the sanction of the committee of inspection.

Dissolution of company

568

• (1) When the company's affairs have been completely wound up, the court (if the liquidator makes an application in that behalf) shall make an order that the company be dissolved from the date of the order, and the company is then dissolved accordingly.

• (2) A copy of the order shall within 14 days from its date be forwarded by the liquidator to the registrar of companies who shall record the company's dissolution.

• (3) If the liquidator makes default in complying with the requirements of subsection (2), he is liable to a fine and, for continued contravention, to a daily default fine.

Enforcement of, and appeal from, orders

Orders for calls on contributories (Scotland)

569

• (1) In Scotland, where an order, interlocutor or decree has been made for winding up a company by the court, it is competent to the court, on production by the liquidators of a list certified by them of the names of the contributories liable in payment of any calls, and of the amount due by each contributory, and of the date when that amount became due, to pronounce forthwith a decree against those contributories for payment of the sums so certified to be due, with interest from that date until payment (at 5 per cent, per annum) in the same way and to the same effect as if they had severally consented to registration for execution, on a charge of 6 days, of a legal obligation to pay those calls and interest.

• (2) The decree may be extracted immediately, and no suspension of it is competent, except on caution or consignation, unless with special leave of the court.

Enforcement throughout United Kingdom of orders made in winding up

570

• (1) An order made by the court in England and Wales for or in the course of winding up a company shall be enforced in Scotland and Northern Ireland in the courts that would respectively have jurisdiction in respect of that company if registered in Scotland or Northern Ireland and in the same manner in all respects as if the order had been made by those courts.

• (2) Orders, interlocutors and decrees made by the court in Scotland for or in the course of winding up a company shall in like manner be enforced in England and Wales and Northern Ireland by any court which would respectively have jurisdiction in respect of that company if registered in that part of the United Kingdom where the order is required to be enforced, and in the same manner in all respects as if the order had been made by that court.

• (3) Where an order, interlocutor or decree made by one court is required to be enforced by another court, an office copy of it shall be produced to the proper officer of the court required to enforce it

• (4) The production of an office copy is sufficient evidence of the order, interlocutor or decree; and thereupon the last-mentioned court shall take the requisite steps in the matter for enforcing it in the same manner as if it had been made by that court

• (5) This section extends to Northern Ireland.

Appeals from orders in Scotland

571

• (1) Subject to the provisions of this section and to rules of court, an appeal from any order or decision made or given in the winding up of a company by the court in Scotland under this Act lies in the same manner and subject to the same conditions as an appeal from an order or decision of the court in cases within its ordinary jurisdiction.

• (2) In regard to orders or judgments pronounced by the judge acting as vacation judge in pursuance of section 4 of the Administration of Justice (Scotland) Act 1933—

• (a) none of the orders specified in Part I of Schedule 16 to this Act are subject to review, reduction, suspension or stay of execution, and

• (b) every other order or judgment (except as mentioned below) may be submitted to review by the Inner House by reclaiming motion enrolled within 14 days from the date of the order or judgment.

• (3) However, an order being one of those specified in Part II of the Schedule shall, from the date of the order and notwithstanding that it has been submitted to review as above, be carried out and receive effect until the Inner House have disposed of the matter.

• (4) In regard to orders or judgments pronounced in Scotland by a Lord Ordinary before whom proceedings in a winding up are being taken, any such order or judgment may be submitted to review by the Inner House by reclaiming motion enrolled within 14 days from its date; but should it not be so submitted to review during session, the provisions of this section in regard to orders or judgments pronounced by the judge acting as vacation judge apply.

• (5) Nothing in this section affects provisions of this Act in reference to decrees in Scotland for payment of calls in the winding up of companies, whether voluntary or by, or subject to the supervision of, the court

CHAPTER III — Voluntary Winding Up

Resolutions for, and commencement of, voluntary winding up

Circumstances in which company may be wound up voluntarily

572

• (1) A company may be wound up voluntarily—

• (a) when the period (if any) fixed for the duration of the company by the articles expires, or the event (if any) occurs, on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution requiring it to be wound up voluntarily;

• (b) if the company resolves by special resolution that it be wound up voluntarily ;

• (c) if the company resolves by extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up.

• (2) In this Act the expression " a resolution for voluntary winding up " means a resolution passed under any of the paragraphs of subsection (1).

• (3) A resolution passed under paragraph (a) of subsection (1), as well as a special resolution under paragraph (b) and an extraordinary resolution under paragraph (c), is subject to section 380 (copy of resolution to be forwarded to registrar of companies within 15 days).

Notice of resolution to wind up voluntarily

573

• (1) When a company has passed a resolution for voluntary winding up, it shall, within 14 days after the passing of the resolution, give notice of the resolution by advertisement in the Gazette.

• (2) If default is made in complying with this section, the company and every officer of it who is in default is liable to a fine and, for continued contravention, to a daily default fine.

For purposes of this subsection the liquidator is deemed an officer of the company.

Commencement of voluntary winding up

574

A voluntary winding up is deemed to commence at the time of the passing of the resolution for voluntary winding up.

Consequences of voluntary winding up

Effect on business and status of company

575

• (1) In case of a voluntary winding up, the company shall from the commencement of the winding up cease to carry on its business, except so far as may be required for its beneficial winding up.

• (2) However, the corporate state and corporate powers of the company, notwithstanding anything to the contrary in its articles, continue until the company is dissolved.

Avoidance of share transfers, etc., after winding up resolution

576

Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the company's members, made after the commencement of a voluntary winding up is void.

Declaration of solvency

Statutory declaration of solvency

577

• (1) Where it is proposed to wind up a company voluntarily, the directors (or, in the case of a company having more than two directors, the majority of them) may at a directors' meeting make a statutory declaration to the effect that they have made a full inquiry into the company's affairs and that, having done so, they have formed the opinion that the company will be able to pay its debts in full within such period, not exceeding 12 months from the commencement of the winding up, as may be specified in the declaration.

• (2) Such a declaration by the directors has no effect for purposes of this Act unless—

• (a) it is made within the 5 weeks immediately preceding the date of the passing of the resolution for winding up, or on that date but before the passing of the resolution, and

• (b) it embodies a statement of the company's assets and liabilities as at the latest practicable date before the making of the declaration.

• (3) The declaration shall be delivered to the registrar of companies before the expiration of 15 days immediately following the date on which the resolution for winding up is passed.

• (4) A director making a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified is liable to imprisonment or a fine, or both.

• (5) If the company is wound up in pursuance of a resolution passed within 5 weeks after the making of the declaration, and its debts are not paid or provided for in full within the period specified, it is to be presumed (unless the contrary is shown) that the director did not have reasonable grounds for his opinion.

• (6) If a declaration required by subsection (3) to be delivered to the registrar is not so delivered within the time prescribed by that subsection, the company and every officer in default is liable to a fine and, for continued contravention, to a daily default fine.

Distinction between " members' " and " creditors'" voluntary winding up

578

A winding up in the case of which a directors' statutory declaration under section 577 has been made is a " members' voluntary winding up "; and a winding up in the case of which such a declaration has not been made is a " creditors' voluntary winding up ".

Provisions applicable to a members' voluntary winding up

Introduction to next 7 sections

579

The provisions contained in sections 580 to 586 apply in relation to a members' voluntary winding up.

Company's power to appoint and fix remuneration of liquidator

580

• (1) The company in general meeting shall appoint one or more liquidators for the purpose of winding up the company's affairs and distributing its assets, and may fix the remuneration to be paid to him or them.

• (2) On the appointment of a liquidator all the powers of the directors cease, except so far as the company in general meeting or the liquidator sanctions their continuance.

Power to fill vacancy in office of liquidator

581

• (1) If a vacancy occurs by death, resignation or otherwise in the office of liquidator appointed by the company, the company in general meeting may, subject to any arrangement with its creditors, fill the vacancy.

• (2) For that purpose a general meeting may be convened by any contributory or, if there were more liquidators than one, by the continuing liquidators.

• (3) The meeting shall be held in manner provided by this Act or by the articles, or in such manner as may, on application by any contributory or by the continuing liquidators, be determined by the court.

Liquidator accepting shares as consideration for sale of company property

582

• (1) The following applies where a company is proposed to be, or is being, wound up altogether voluntarily, and the whole or part of its business or property is proposed to be transferred or sold to another company (" the transferee company "), whether or not this latter is a company within the meaning of this Act.

• (2) The liquidator of the company to be, or being, wound up (" the transferor company ") may, with the sanction of a special resolution of that company, conferring cither a general authority on himself or an authority in respect of any particular arrangement, receive, in compensation or part compensation for the transfer or sale, shares, policies or other like interests in the transferee company for distribution among the members of the transferor company.

• (3) Alternatively, the liquidator may (with that sanction) enter into any other arrangement whereby the members of the transferor company may, in lieu of receiving cash, shares, policies or other like interests (or in addition thereto), participate in the profits of, or receive any other benefit from, the transferee company.

• (4) A sale or arrangement in pursuance of this section is binding on members of the transferor company.

• (5) If a member of the transferor company who did not vote in favour of the special resolution expresses his dissent from it in writing addressed to the liquidator, and left at the company's registered office within 7 days after the passing of the resolution, he may require the liquidator either to abstain from carrying the resolution into effect or to purchase his interest at a price to be determined by agreement or by arbitration in manner provided by this section.

• (6) If the liquidator elects to purchase the member's interest, the purchase money must be paid before the company is dissolved and be raised by the liquidator in such manner as may be determined by special resolution.

• (7) A special resolution is not invalid for purposes of this section by reason that it is passed before or concurrently with a resolution for voluntary winding up or for appointing liquidators ; but, if an order is made within a year for winding up the company by or subject to the supervision of the court, the special resolution is not valid unless sanctioned by the court.

• (8) For purposes of an arbitration under this section, the provisions of the Companies Clauses Consolidation Act 1845 or, in the case of a winding up in Scotland, the Companies Clauses Consolidation (Scotland) Act 1845 with respect to the settlement of disputes by arbitration are incorporated with this Act, and—

• (a) in the construction of those provisions this Act is deemed the special Act and " the company " means the transferor company, and

• (b) any appointment by the incorporated provisions directed to be made under the hand of the secretary or any two of the directors may be made in writing by the liquidator (or, if there is more than one liquidator, then any two or more of them).

Creditors' meeting in case of insolvency

583

• (1) If the liquidator is at any time of opinion that the company will not be able to pay its debts in full within the period stated in the directors' declaration under section 577, he shall forthwith summon a meeting of the creditors, and shall lay before the meeting a statement of the company's assets and liabilities.

• (2) If the liquidator fails to comply with this section, he is liable to a fine.

General company meeting at each year's end

584

• (1) Subject to section 586, in the event of the winding up continuing for more than one year, the liquidator shall summon a general meeting of the company at the end of the first year from the commencement of the winding up, and of each succeeding year, or at the first convenient date within 3 months from the end of the year or such longer period as the Secretary of State may allow, and shall lay before the meeting an account of his acts and dealings and of the conduct of the winding up during the preceding year.

• (2) If the liquidator fails to comply with this section, he is liable to a fine.

Final meeting and dissolution

585

• (1) As soon as the company's affairs are fully wound up, the liquidator shall make up an account of the winding up, showing how it has been conducted and the company's property has been disposed of, and thereupon shall call a general meeting of the company for the purpose of laying before it the account, and giving an explanation of it

• (2) The meeting shall be called by advertisement in the Gazette, specifying its time, place and object and published at least one month before the meeting.

• (3) Within one week after the meeting, the liquidator shall send to the registrar of companies a copy of the account, and shall make a return to him of the holding of the meeting and of its date; and if the copy is not sent or the return is not made in accordance with this subsection the liquidator is liable to a fine and, for continued contravention, to a daily default fine.

• (4) If a quorum is not present at the meeting, the liquidator shall, in lieu of the return mentioned above, make a return that the meeting was duly summoned and that no quorum was present; and upon such a return being made, the provisions of subsection (3) as to the making of the return are deemed complied with.

• (5) The registrar on receiving the account and either of these returns shall forthwith register them, and on the expiration of 3 months from the registration of the return the company is deemed to be dissolved; but the court may, on the application of the liquidator or of any other person who appears to the court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the court thinks fit.

• (6) It is the duty of the person on whose application an order of the court under this section is made within 7 days after the making of the order to deliver to the registrar an office copy of the order for registration; and if that person fails to do so he is liable to a fine and, for continued contravention, to a daily default fine.

• (7) If the liquidator fails to call a general meeting of the company as required by subsection (1), he is liable to a fine.

Alternative provision as to company meetings in case of insolvency

586

• (1) Where section 583 has effect, sections 594 and 595 apply to the winding up to the exclusion of sections 584 and 585, as if the winding up were a creditors' voluntary winding up and not a members' voluntary winding up.

• (2) However, the liquidator is not required to summon a meeting of creditors under section 594 at the end of the first year from the commencement of the winding up, unless the meeting held under section 583 is held more than 3 months before the end of that year.

Provisions applicable to a creditors' voluntary winding up

Introduction to next 8 sections

587

The provisions contained in sections 588 to 595 apply in relation to a creditors' voluntary winding up.

Meeting of creditors

588

• (1) The company shall give at least 7 days' notice of the company meeting at which the resolution for voluntary winding up is to be proposed.

This applies notwithstanding any power of the members, or of any particular majority of the members, to exclude or waive any other requirement of this Act or the company's articles with respect to the period of notice to be given of any company meeting.

• (2) The company shall in addition—

• (a) cause a meeting of its creditors to be summoned for the day, or the day next following the day, on which the company meeting is to be held,

• (b) cause the notices of the creditors' meeting to be sent by post to the creditors simultaneously with the sending of the notices of the company meeting, and

• (c) cause notice of the creditors' meeting to be advertised once in the Gazette and once at least in two local newspapers circulating in the district in which the company's registered office or its principal place of business is situated.

• (3) The directors of the company shall—

• (a) cause a full statement of the position of the company's affairs, together with a list of its creditors and the estimated amount of their claims, to be laid before the creditors' meeting, and

• (b) appoint one of their number to preside at the meeting;

and it is the duty of the director so appointed to attend the meeting and preside at it.

• (4) If the company meeting at which the resolution for voluntary winding up is to be proposed is adjourned and the resolution is passed at an adjourned meeting, any resolution passed at the creditors' meeting held under subsection (2) has effect as if it had been passed immediately after the passing of the resolution for voluntary winding up.

• (5) If default is made—

• (a) by the company in complying with subsections (1) and (2),

• (b) by the directors in complying with subsection (3),

• (c) by any director in complying with that subsection, so far as requiring him to attend and preside at the creditors' meeting,

the company, the directors or the director (as the case may be) is or are liable to a fine; and, in the case of default by the company, every officer of the company who is in default is also so liable.

• (6) Failure to give notice of the company meeting as required by subsection (1) does not affect the validity of any resolution passed or other thing done at that meeting which would be valid apart from that subsection.

Appointment of liquidator

589

• (1) The creditors and the company at their respective meetings mentioned in section 588 may nominate a person to be liquidator for the purpose of winding up the company's affairs and distributing its assets.

• (2) If the creditors and the company nominate different persons, the person nominated by the creditors shall be liquidator; and if no person is nominated by the creditors the person (if any) nominated by the company shall be liquidator.

• (3) In the case of different persons being nominated, any director, member or creditor of the company may, within 7 days after the date on which the nomination was made by the creditors, apply to the court for an order either—

• (a) directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors, or

• (b) appointing some other person to be liquidator instead of the person nominated by the creditors.

Appointment of committee of inspection

590

• (1) The creditors at the meeting to be held under section 588 or at any subsequent meeting may, if they think fit, appoint a committee of inspection consisting of not more than 5 persons.

• (2) If such a committee is appointed, the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any time subsequently in general meeting, appoint such number of persons as they think fit to act as members of the committee, not exceeding 5.

• (3) However, the creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the committee of inspection : and if the creditors so resolve—

• (a) the persons mentioned in the resolution are not then, unless the court otherwise directs, qualified to act as members of the committee, and

• (b) on any application to the court under this provision the court may, if it thinks fit, appoint other persons to act as such members in place of the persons mentioned in the resolution.

• (4) Schedule 17 has effect with respect to a committee of inspection appointed under this section and its proceedings.

• (5) In Scotland, such a committee has, in addition to the powers and duties conferred and imposed on it by this Act, such of the powers and duties of commissioners on a bankrupt estate as may be conferred and imposed on committees of inspection by general rules.

Remuneration of liquidator; cesser of directors' powers

591

• (1) The committee of inspection or, if there is no such committee, the creditors may fix the remuneration to be paid to the liquidator or liquidators.

• (2) On the appointment of a liquidator, all the powers of the directors cease, except so far as the committee of inspection (or, if there is no such committee, the creditors) sanction their continuance.

Vacancy in office of liquidator

592

If a vacancy occurs, by death, resignation or otherwise, in the office of a liquidator (other than a liquidator appointed by, or by the direction of, the court), the creditors may fill the vacancy.

Application of s. 582 to creditors' voluntary winding up

593

Section 582 applies in the case of a creditors' voluntary winding up as in the case of a members' voluntary winding up, with the modification that the liquidator's powers under that section are not to be exercised except with the sanction either of the court or of the committee of inspection.

Meetings of company and creditors at end of each year

594

• (1) If the winding up continues for more than one year, the liquidator shall summon a general meeting of the company and a meeting of the creditors at the end of the first year from the commencement of the winding up, and of each succeeding year, or at the first convenient date within 3 months from the end of the year or such longer period as the Secretary of State may allow, and shall lay before the meetings an account of his acts and dealings and of the conduct of the winding up during the preceding year.

• (2) If the liquidator fails to comply with this section, he is liable to a fine.

Final meeting and dissolution

595

• (1) As soon as the company's affairs are fully wound up, the liquidator shall make up an account of the winding up, snowing how it has been conducted and the company's property has been disposed of, and thereupon shall call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meetings and giving an explanation of it.

• (2) Each such meeting shall be called by advertisement in the Gazette specifying the time, place and object of the meeting, and published at least one month before it.

• (3) Within one week after the date of the meetings (or, if they are not held on the same date, after the date of the later one) the liquidator shall send to the registrar of companies a copy of the account, and shall make a return to him of the holding of the meetings and of their dates.

• (4) If the copy is not sent or the return is not made in accordance with subsection (3), the liquidator is liable to a fine and, for continued contravention, to a daily default fine.

• (5) However, if a quorum is not present at either such meeting, the liquidator shall, in lieu of the return required by subsection (3), make a return that the meeting was duly summoned and that no quorum was present; and upon such return being made the provisions of that subsection as to the making of the return are, in respect of that meeting, deemed complied with.

• (6) The registrar on receiving the account and, in respect of each such meeting, either of the returns mentioned above, shall forthwith register them, and on the expiration of 3 months from their registration the company is deemed to be dissolved; but the court may, on the application of the liquidator or of any other person who appears to the court to be interested, make an order deferring the date at which the dissolution of the company is to take effect for such time as the court thinks fit.

• (7) It is the duty of the person on whose application an order of the court under this section is made, within 7 days after the making of the order, to deliver to the registrar an office copy of the order for registration; and if that person fails to do so he is liable to a fine and, for continued contravention, to a daily default fine.

• (8) If the liquidator fails to call a general meeting of the company or a meeting of the creditors as required by this section, he is liable to a fine.

Provisions applicable to every voluntary winding up

Introduction to next 9 sections

596

The provisions of sections 597 to 605 apply to every voluntary winding up, whether a members' or a creditors' winding up.

Distribution of company's property

597

Subject to the provisions of this Act as to preferential payments, the company's property shall on the winding up be applied in satisfaction of the company's liabilities pari passu and, subject to that application, shall (unless the articles otherwise provide) be distributed among the members according to their rights and interests in the company.

Powers and duties of liquidator in voluntary winding up

598

• (1) The liquidator may—

• (a) in the case of a members' voluntary winding up, with the sanction of an extraordinary resolution of the company, and

• (b) in the case of a creditors' voluntary winding up, with the sanction of the court or the committee of inspection (or, if there is no such committee, a meeting of the creditors),

exercise any of the powers given by paragraphs (d), (e) and (f) of section 539(1) to a liquidator in a winding up by the court.

• (2) The liquidator may, without sanction, exercise any of the other powers given by this Act to the liquidator in a winding up by the court.

• (3) The liquidator may—

• (a) exercise the court's power of settling a list of contributories (and the list of contributories is prima facie evidence of the liability of the persons named in it to be contributories),

• (b) exercise the court's power of making calls,

• (c) summon general meetings of the company for the purpose of obtaining its sanction by special or extraordinary resolution or for any other purpose he may think fit

• (4) The liquidator shall pay the company's debts and adjust the rights of the contributories among themselves.

• (5) When several liquidators are appointed, any power given by this Act may be exercised by such one or more of them as may be determined at the time of their appointment or, in default of such determination, by any number not less than two.

Appointment or removal of liquidator by the court

599

• (1) If from any cause whatever there is no liquidator acting, the court may appoint a liquidator.

• (2) The court may, on cause shown, remove a liquidator and appoint another.

Notice by liquidator of his appointment

600

• (1) The liquidator shall, within 14 days after his appointment, publish in the Gazette and deliver to the registrar of companies for registration a notice of his appointment in the form prescribed by statutory instrument made by the Secretary of State.

• (2) If the liquidator fails to comply with this section he is liable to a fine and, for continued contravention, to a daily default fine.

Arrangement when binding on creditors

601

• (1) Any arrangement entered into between a company about to be, or in the course of being, wound up and its creditors is (subject to the right of appeal under this section) binding—

• (a) on the company, if sanctioned by an extraordinary resolution, and

• (b) on the creditors, if acceded to by three-fourths in number and value of them.

• (2) Any creditor or contributory may, within 3 weeks from the completion of the arrangement, appeal to the court against it; and the court may thereupon, as it thinks just, amend, vary or confirm the arrangement.

Reference of questions and powers to court

602

• (1) The liquidator or any contributory or creditor may apply to the court to determine any question arising in the winding up of a company, or to exercise, as respects the enforcing of calls or any other matter, all or any of the powers which the court might exercise if the company were being wound up by the court.

• (2) The court, if satisfied that the determination of the question or the required exercise of power will be just and beneficial, may accede wholly or partially to the application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just

• (3) A copy of an order made by virtue of this section staying the proceedings in the winding up shall forthwith be forwarded by the company, or otherwise as may be prescribed, to the registrar of companies, who shall enter it in his records relating to the company.

Court's power to control proceedings (Scotland)

603

If the court, on the application of the liquidator in the winding up of a company registered in Scotland, so directs, no action or proceeding shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose.

Costs of voluntary winding up

604

All costs, charges and expenses properly incurred in the winding up, including the remuneration of the liquidator, are payable out of the company's assets in priority to all other claims.

Saving for rights of creditors and contributories

605

The winding up of a company under this Chapter does not bar the right of any creditor or contributory to have it wound up by the court; but in the case of an application by a contributory the court must be satisfied that the rights of the contributories will be prejudiced by a voluntary winding up.

CHAPTER IV — Winding up Subject to Supervision of Court

Power to order winding up under supervision

606

When a company has passed a resolution for voluntary winding up, the court may make an order that the voluntary winding up shall continue but subject to such supervision of the court, and with such liberty for creditors, contributories or others to apply to the court, and generally on such terms and conditions, as the court thinks just.

Effect of petition for court supervision

607

A petition for the continuance of a voluntary winding up subject to the supervision of the court is deemed, for the purpose of giving jurisdiction to the court over actions, to be a petition for winding up by the court.

Application of ss. 522, 523

608

A winding up subject to the supervision of the court is deemed for the purposes of sections 522 and 523 (avoidance of dispositions of property, etc.) to be a winding up by the court.

Appointment and removal of liquidators

609

• (1) Where an order is made for a winding up subject to supervision, the court may by that or any subsequent order appoint an additional liquidator.

• (2) A liquidator so appointed has the same powers, is subject to the same obligations, and in all respects stands in the same position, as if he had been duly appointed in accordance with provisions of this Act with respect to the appointment of liquidators in a voluntary winding up.

• (3) The court may remove a liquidator so appointed by the court, or any liquidator continued under the supervision order, and fill any vacancy occasioned by the removal, or by death or resignation.

Effect of supervision order

610

• (1) Where an order is made for a winding up subject to supervision, the liquidator may (subject to any restrictions imposed by the court) exercise all his powers, without the court's sanction or intervention, in the same manner as if the company were being wound up altogether voluntarily.

• (2) However, the powers specified in paragraphs (d), (e) and (f) of section 539(1) shall not be exercised by the liquidator except with the sanction of the court or, in a case where before the order the winding up was a creditors' voluntary winding up, with the sanction of the court or the committee of inspection or (if there is no such committee) a meeting of the creditors.

• (3) A winding up subject to the supervision of the court is not a winding up by the court for the purposes of the provisions of this Act specified in Schedule 18, nor for those of section 491 (power in England and Wales to appoint official receiver as receiver for debenture holders or creditors); but, subject to this, an order for a winding up subject to supervision is deemed to be for all purposes an order for winding up by the court.

• (4) But where the order for winding up subject to supervision was made in relation to a creditors' voluntary winding up in which a committee of inspection had been appointed, the order is deemed an order for winding up by the court for the purposes of section 547(2)(b) and Schedule 17, except in so far as the operation of those provisions is excluded in a voluntary winding up by general rules.

CHAPTER V — Provisions Applicable to Every Mode of Winding up

Proof and ranking of claims

Debts of all descriptions may be proved

611

• (1) In every winding up (subject, in the case of insolvent companies, to the application in accordance with this Act of the law of bankruptcy) all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, are admissible to proof against the company.

• (2) A just estimate is to be made (so far as possible) of the value of such debts or claims as may be subject to any contingency or sound only in damages, or for some other reason do not bear a certain value.

Application of bankruptcy rules (England and Wales)

612

• (1) In the winding up of an insolvent company registered in England and Wales the same rules prevail and are to be observed with regard to the respective rights of secured and unsecured creditors, and to debts provable and to the valuation of annuities and future and contingent liabilities, as are in force for the time being under the law of bankruptcy in England and Wales with respect to the estates of persons adjudged bankrupt

• (2) All those who in any such case would be entitled to prove for and receive dividends out of the company's assets may come in under the winding up and make such claims against the company as they respectively are entitled to by virtue of this section.

Ranking of claims (Scotland)

613

• (1) In the winding up of a company registered in Scotland, the following provisions of the Bankruptcy (Scotland) Act 1913—

• (a) sections 45 to 62 regarding voting and ranking for payment of dividends,

• (b) section 96 (reckoning of majorities), and

• (c) section 105 (interruption of prescription),

apply, so far as is consistent with this Act, in like manner as they apply in the sequestration of a bankrupt's estate, with the substitutions specified below, and with any other necessary modifications.

• (2) The substitutions to be made in those sections of the Act of 1913 are as follows—

• (a) for references to sequestration, substitute references to winding up,

• (b) for references to the sheriff, substitute references to the court,

• (c) for references to the trustee, substitute references to the liquidator, and

• (d) for references to the bankrupt, substitute references to the company.

Preferential payments

614

• (1) In a winding up the preferential debts listed in Schedule 19 shall be paid in priority to all other debts, but with the exceptions and reservations specified in that Schedule.

• (2) The preferential debts shall—

• (a) rank equally among themselves and be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions, and

• (b) so far as the assets of the company available for payment of general creditors are insufficient to meet them, have priority over the claims of holders of debentures under any floating charge created by the company, and be paid accordingly out of any property comprised in or subject to that charge.

• (3) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding up, the preferential debts shall be discharged forthwith so far as the assets are sufficient to meet them; and in the case of the debts to which priority is given by paragraph 8 of Schedule 19 (social security payments), formal proof of them is not required except in so far as is otherwise provided by general rules.

• (4) In the event of a landlord or other person distraining or having distrained on any goods or effects of the company within 3 months next before the date of a winding-up order, the preferential debts are a first charge on the goods or effects so distrained on, or the proceeds of their sale; but in respect of any money paid under such a charge, the landlord or other person has the same rights of priority as the person to whom the payment is made.

Effect of winding up on antecedent and other transactions

Fraudulent preference

615

• (1) Any conveyance, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company within 6 months before the commencement of its winding up which, had it been made or done by or against an individual within 6 months before the presentation of a bankruptcy petition on which he is adjudged bankrupt, would be deemed in his bankruptcy a fraudulent preference, is in the event of the company being wound up deemed a fraudulent preference of its creditors and invalid accordingly.

• (2) Any conveyance or assignment by a company of all its property to trustees for the benefit of all its creditors is void to all intents.

• (3) In the application of this section to Scotland, " bankruptcy petition " means petition for sequestration.

Liabilities and rights of those fraudulently preferred (England and Wales)

616

• (1) Where in the case of a company wound up in England and Wales anything made or done is void under section 615 as a fraudulent preference of a person interested in property mortgaged or charged to secure the company's debt, then (without prejudice to any rights or liabilities arising apart from this provision) the person preferred is subject to the same liabilities, and has the same rights, as if he had undertaken to be personally liable as surety for the debt to the extent of the charge on the property or the value of his interest, whichever is the less.

• (2) The value of the person's interest is determined as at the date of the transaction constituting the fraudulent preference, and as if the interest were free of all incumbrances other than those to which the charge for the company's debt was then subject.

• (3) On an application made to the court with respect to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the court has jurisdiction to determine any question with respect to the payment arising between the person to whom the payment was made and the surety or guarantor, and to grant relief in respect of it.

• (4) The court's jurisdiction under subsection (3) is exercisable notwithstanding that the determination of the question is not necessary for the purposes of the winding up; and the court may for the purposes of that subsection give leave to bring in the surety or guarantor as a third party as in the case of an action for the recovery of the sum paid.

• (5) Subsections (3) and (4) apply, with the necessary modifications, in relation to transactions other than the payment of money as they apply in relation to payments.

Effect of floating charge

617

• (1) Where a company is being wound up, a floating charge on its undertaking or property created within 12 months of the commencement of the winding up is invalid (unless it is proved that the company immediately after the creation of the charge was solvent), except to the amount of any cash paid to the company at the time of or subsequently to the creation of, and in consideration for, the charge, together with interest on that amount.

• (2) Interest under this section is at the rate of 5 per cent, per annum or such other rate as may for the time being be prescribed by order of the Treasury in a statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

• (3) Where a company is being wound up in Scotland, a floating charge over all or any part of its property is not to be held an alienation or preference voidable by statute (other than by the provisions of this section) or at common law on the ground of insolvency or notour bankruptcy.

Disclaimer of onerous property (England and Wales)

618

• (1) Where any part of the property of a company which is being wound up consists of land (of any tenure) burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts, or of any other property that is unsaleable, or not readily saleable, by reason of its binding its possessor to the performance of any onerous act or to the payment of any sum of money, the liquidator may, with the leave of the court and subject to the provisions of this section and the next, disclaim the property.

• (2) The power to disclaim is exercisable notwithstanding that the liquidator has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation to it; and the disclaimer must be in writing signed by him.

• (3) The power is exercisable at any time within 12 months after the commencement of the winding up or such extended period as may be allowed by the court; but where any such property has not come to the liquidator's knowledge within one month after the commencement of the winding up, he may disclaim at any time within 12 months after he has become aware of it or such extended period as may be so allowed.

• (4) The disclaimer operates to determine, as from the date of disclaimer, the rights, interests and liabilities of the company, and the company's property, in or in respect of the property disclaimed; but it does not (except so far as is necessary for the purpose of releasing the company and its property from liability) affect the rights or liabilities of any other person.

• (5) This section does not apply in the case of a winding up in Scotland.

Further provisions about disclaimer under s. 618

619

• (1) The court, before or on granting leave to disclaim under section 618, may require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such other order in the matter, as the court thinks just.

• (2) The liquidator is not entitled to disclaim property under section 618 in a case where application in writing has been made to him by persons interested in the property requiring him to decide whether he will or will not disclaim and he has not within 28 days after the receipt of the application (or such further period as may be allowed by the court) given notice to the applicant that he intends to apply to the court for leave to disclaim.

• (3) In the case of a contract, if the liquidator after such an application does not within that period or further period disclaim the contract, the company is deemed to have adopted it.

• (4) The court may, on the application of a person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the court thinks just; and any damages payable under the order to such a person may be proved by him as a debt in the winding up.

• (5) The court may, on an application by a person who either claims an interest in disclaimed property or is under a liability not discharged by this Act in respect of disclaimed property, and on hearing any such persons as it thinks fit, make an order for the vesting of the property in or its delivery to any persons entitled to it, or to whom it may seem just that the property should be delivered by way of compensation for such liability, or a trustee for him, and on such terms as the court thinks just

• (6) On such a vesting order being made, the property comprised in it vests accordingly in the person named in that behalf in the order, without conveyance or assignment for that purpose.

• (7) Part I of Schedule 20 has effect for the protection of third parties where the property disclaimed is of a leasehold nature.

• (8) A person injured by the operation of a disclaimer under section 618 and this section is deemed a creditor of the company to the amount of the injury, and may accordingly prove the debt in the winding up.

Liability for rentcharge on company's land after disclaimer

620

• (1) Where on a disclaimer under section 618 land in England and Wales vests subject to a rentcharge in the Crown or any other person, that does not impose on the Crown or that other person, or on its or his successors in title, any personal liability in respect of the rentcharge.

• (2) But this section does not affect any liability in respect of sums accruing due after the Crown or other person, or some person claiming through or under it or him, has taken possession or control of the land or has entered into occupation of it.

• (3) This section applies to land whenever vesting, and to sums whenever accrued.

Effect of execution or attachment (England and Wales)

621

• (1) Where a creditor has issued execution against the goods or land of a company or has attached any debt due to it, and the company is subsequently wound up, he is not entitled to retain the benefit of the execution or attachment against the liquidator in the winding up unless he has completed the execution or attachment before the commencement of the winding up.

• (2) However—

• (a) if a creditor has had notice of a meeting having been called at which a resolution for voluntary winding up is to be proposed, the date on which he had notice is substituted, for the purpose of subsection (1), for the date of commencement of the winding up,

• (b) a person who purchases in good faith under a sale by the sheriff any goods of a company on which execution has been levied in all cases acquires a good tide to them against the liquidator, and

• (c) the rights conferred by subsection (1) on the liquidator may be set aside by the court in favour of the creditor to such extent and subject to such terms as the court thinks fit.

• (3) For purposes of this Act—

• (a) an execution against goods is completed by seizure and sale, or by the making of a charging order under section 1 of the Charging Orders Act 1979 ;

• (b) an attachment of a debt is completed by receipt of the debt; and

• (c) an execution against land is completed by seizure, by the appointment of a receiver, or by the making of a charging order under section 1 of the Act above-mentioned.

• (4) In this section, " goods " includes all chattels personal; and " the sheriff " includes any officer charged with the execution of a writ or other process.

• (5) This section does not apply in the case of a winding up in Scotland.

Duties of sheriff where goods seized in execution (England and Wales)

622

• (1) The following applies where a company's goods are taken in execution and, before their sale or the completion of the execution (by the receipt or recovery of the full amount of the levy), notice is served on the sheriff that a provisional liquidator has been appointed or that a winding-up order has been made, or that a resolution for voluntary winding up has been passed.

• (2) The sheriff shall, on being so required, deliver the goods and any money seized or received in part satisfaction of the execution to the liquidator; but the costs of execution are a first charge on the goods or money so delivered, and the liquidator may sell the goods, or a sufficient part of them, for the purpose of satisfying the charge.

• (3) If under an execution in respect of a judgment for a sum exceeding £250 a company's goods are sold or money is paid in order to avoid sale, the sheriff shall deduct the costs of the execution from the proceeds of sale or the money paid and retain the balance for 14 days.

• (4) If within that time notice is served on the sheriff of a petition for the winding up of the company having been presented, or of a meeting having been called at which there is to be proposed a resolution for voluntary winding up, and an order is made or a resolution passed (as the case may be), the sheriff shall pay the balance to the liquidator, who is entitled to retain it as against the execution creditor.

• (5) The rights conferred by this section on the liquidator may be set aside by the court in favour of the creditor to such extent and subject to such terms as the court thinks fit

• (6) In this section, " goods " includes all chattels personal; and " the sheriff" includes any officer charged with the execution of a writ or other process.

• (7) The money sum for the time being specified in subsection (3) is subject to increase or reduction by regulations under section 664; but no increase or reduction of it affects any case where the goods are sold, or the payment to avoid sale is made, before the coming into force of the increase or reduction.

• (8) This section does not apply in the case of a winding up in Scotland.

Effect of diligence within 60 days of winding up

623

• (1) The following applies in the case of the winding up of a company registered in Scotland.

• (2) The winding up is equivalent as at the date of its commencement, to an arrestment in execution and decree of furthcoming, and to an executed or completed poinding; and—

• (a) no arrestment or poinding of the funds or effects of the company executed on or after the 60th day prior to that date is effectual, and

• (b) those funds or effects (or their proceeds if sold) shall be made forthcoming to the liquidator: