cannot be attributed to Bilta in these proceedings, and (ii) section 213 of the Insolvency Act 1986 has extra-territorial effect. The reasons for this will be discussed in more detail later. a) Proceedings against the company. If you are a company director whose company is the subject of liquidation proceedings, you will need to talk with a lawyer. the proceedings leading up to the court’s appointment of the liquidator are judicial. 2.4 Court-ordered liquidation The purpose of a liquidation, whether court … The liquidation of a company by court order shall be deemed to commence at the time the liquidation application is presented to the court. IBC provides for initiating Corporate Insolvency Resolution Process ( "CIRP" ) by financial creditor, operational creditor and corporate applicant under Section 7, Section 9 and Section 10 of IBC respectively when a default is committed by a corporate debtor. Act provides for a stay of proceedings against the company during all court-ordered liquidations, but only one form of voluntary liquidation, namely, a creditors' voluntary winding up. However, such terms will be contained in the scheme document and are not legislatively prescribed. Moratorium During Liquidation: Scope & Effect “When a winding-up order is made, the Court, acting by its officer the Official Receiver lays its hand upon the assets and says, no creditor or claimant must touch these assets or take proceedings by way of action, execution or attachment pending the distribution by the Court _____ _____ 2. Liquidation Proceedings of Individual Debtor a. (b) winding-up and liquidation by court order, as contemplated in section 81.” The process of Voluntary Liquidation. (Sec. Effects of Compulsory Winding Up. ... the court also dealt with the effect … ... Once a Winding up Order has come into effect, ... there is an instant statutory moratorium against any further legal proceedings by creditors. The FSCS case also confirmed that the effect of the company restoration is that the liquidation is revived and a limitation defence was therefore confined only to the period before the commencement of the liquidation. In interpreting the concept ‘liquidation proceedings’, the court placed significance on the fact that s 131(1) of the Act entitles affected persons to apply to court for an order placing a company under supervision and commencing business rescue proceedings at any time. The purpose of liquidation proceedings. If closure of the proceedings cannot be pronounced by this date, the court may extend the time period, with a justified ruling. ... What effects do liquidation procedures have on existing contracts? The Maroos judgment did not set out any definitive terms as to what the duties and functions of liquidators were whilst there was this pending application for business rescue. The court held that a plaintiff which launches originating proceedings against a company in liquidation, seeking adverse orders against that company, requires leave of the court to bring the proceedings. ‘If liquidation proceedings have already been commenced by or against the company at ... those liquidation proceedings until-(a) the court has adjudicated upon the application; or (b) the business rescue proceedings end, if the court makes the order applied for. A COMPARATIVE STUDY OF THE EFFECTS OF LIQUIDATION OR BUSINESS RESCUE PROCEEDINGS ON THE RIGHTS OF THE EMPLOYEES OF A COMPANY. ... Effect of liquidation on uncompleted contracts. Insolvency professionals assist in completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged in the IBC. 2.4.2 Commencement by Court Application 14 2.5 Effective Date of Liquidation 15 2.6 Legal Effects of a Liquidation Order 16 2.6.1 Effect on the Company’s Legal Status 16 2.6.2 Effect on the Rights of Creditors 17 2.6.3 Effect on the Rights of Directors 17 2.6.4 Effect on the Rights of Shareholders 18 2.6.5 Effect on the Rights of Employees 19 In some respects, the above problems can be mitigated by providing for a mechanism that allows the court (either on its own motion or at the request of the creditors) to convert the proceedings to liquidation proceedings when there is no reasonable likelihood of rehabilitation or when there is evidence that the debtor is not acting responsibly and in good faith. Attribution 7. Devi Trading moved to the Calcutta High Court with the contentions that IBC has an overriding effect over all the other laws in this field. in the premises, NCLT proceedings in present case will continue from the stage it was stopped and as a result, company petition pending before High Court cannot be proceeded with in the light of overwhelming effect of Section 238 of IBC and Writ Petitions pending in the High Court will have to be disposed of since proceedings before NCLT will see their logical conclusion. When a company is put into liquidation the assets of the company are placed into the care of an appointed person (called a liquidator) to be given to the company’s creditors. I declare that the above thesis is my own work and that all the sources that I have used or quoted have been indicated and acknowledged by means of complete references. IBC is a succeeding enactment and is made in consideration with the Companies Act, 2013 (“2013 Act”). A court application to begin business rescue proceedings may be made even after liquidation proceedings have been commenced, and this will have the effect of suspending the liquidation proceedings until the court has refused the business rescue application, or if it is granted, until the business rescue proceedings have ended. • The business rescue proceedings end, if the court makes the order applied for. In effect the courts interpreted the words “suspend the liquidation proceedings” as utilised in Section 131(6) and interpreted by Seriti JA in the Maroos judgment narrowly and restrictively. Any surplus after paying the creditors and costs of liquidation will be returned to the shareholders. An application may be made to the Court to stay or restrain pending proceedings against the company at any time after the presentation of a winding up application and before a winding up order has been made. 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