Grounds[ edit ] The grounds upon which an entity can apply to the court for an order of compulsory liquidation also vary between jurisdictions, but normally include: The company has so resolved The company was incorporated as a corporationand has not been issued with a trading certificate or equivalent within 12 months of registration It is an "old public company" i. It can take account of personal relationships of mutual trust and confidence in small parties, particularly, for example, where there is a breach of an understanding that all of the members may participate in the business,  or of an implied obligation to participate in management.
Hire Writer Every petition for the appointment of an examiner must be verified by an affidavit which in most cases is sworn in by the petitioner. Section 3 9 of the companies Amendment Act says that the High Court may on the making of such interim orders or such other orders as the court ay think fit, remit the matter to the circuit Court where the liabilities of the company do not exceed?
Liquidation Liquidation as opposed to Examinership is the process of winding up a company so that it no longer exists by using its assets to pay its debts.
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Michael Forde quotes B. H McPherson who defines liquidation as the process of whereby the assets of the company are collected and realised, the resulting proceeds are applied in ischarging all its debts and liabilities and any balance that remains after paying costs and expenses of winding is distributed among the members according to their and interest or other ways according to the constitution of the company.
The two principal forms of liquidation are Voluntary liquidation and Compulsory liquidation.
Voluntary Liquidation can take two forms members voluntary liquidation or Creditors voluntary liquidation. In the case of a Members Voluntary Liquidation, the company must be solvent and any debts to creditors must be paid in full. In a Creditors Voluntary Llqulaatlon, tne Dlrectors ana Memoers 0T a company aec10e to place tne company in Liquidation due to the fact that it is insolvent and is incapable of discharging its debts.
Compulsory Liquidation is usually instigated when a Creditor petitions the Irish Court for a winding-up order.
If the Creditor makes out a case to the Court, the company will be placed in Compulsory Liquidation. Section and of the Act set out grounds under which court may decide to appoint a receiver. Receivership In contrast to the above two Receivership is an insolvency scheme initiated by secured creditors usually a bank, seeking to recover unpaid loans.
A Receiver is appointed, pursuant to the terms of the original loan agreement, for the purpose of recovering the money owed to the creditor. The principal task of the receiver is to realise those assets and distribute the proceeds to the debenture holder in accordance with the provision of the Companies Acts.
Receivership is used as a means of reimbursing creditor but more as to salvage their viable parts for the benefit of those involved. The appointment ofa receiver crystallises floating charges to become fixed charges and prevents company directors form dealing with company assets covered by the receivership without the consent of the receiver.
It is important to note that the two directors may be possibly in breach of different forms of company laws as noted below: Proper keeping of books of Accounts First it is worth noting that there may have been a breach of section to of the Companies Act which replaced the section Of the Act.
These sections of the Act require all companies to keep proper books of Accounts, which books must give a true and fair view of the state of the affairs of the company and explain its transaction.
JOG and POG in this scenario as company directors failed to comply with the above section and may be guilty of an offence under section 1 of the Companies Act They will need to prove if taken to court that they had reasonable grounds for believing that a competent and reliable person was in charge with the duty of ensuring that those requirements were observed, which is not the ase in this situation because their financial Controller had departed in the recent months.
The section allows officers of companies such as JOG and POG to be held personally liable without limitation for the debts of the company where they either: In addition the question of whether reckless trading was objective or subjective will have to be determined if JOG and POG are taken to court.
The test of what is considered as subjective was laid down in Re Hefferon Kearns Ltd  l. MLynch J.
He referred to the case of Shawinigan v Vodkins 1 W. On the other hand the objective test was given in the same case in Re Hefferon Kearns ltd , Lynch J. That it is to be assumed on the basis of what they ought to have known and not merely on what they in fact knew.
Merely continuing with the business when that fact involves unjustifiable risk and causes loss to creditor is enough. In addition the undervaluing of the company assets the proposed sale of the company van worth?Employers Insolvency — Q & A.
The impact of insolvency on the employment relationship is a complex area of law.
In this article I shall address questions we frequently receive from clients entering into examinership, liquidation or receivership. The 3 Irish insolvency concepts of Liquidation, Receivership and Examinership are explained in our latest blog post.
Examinership, Liquidation and Receivership are the three main insolvency schemes in Ireland; they are provided for in Part VII and Part VIII of the Companies Act as amended in The main differences between examinerships, liquidations and receivership are outline below;.
Insolvency set-off nets sums owed to a creditor by a company in insolvent liquidation against any sums owed to the insolvent company by the same creditor. Mutual debts are set-off on the date a liquidator gives notice that he will make a distribution to the company's creditors.
By Simon O’ Connor, 23rd of December When a company can no longer meet its financial obligations it becomes insolvent. Depending on the situation, the company may go into Examinership, Receivership or Liquidation. We are experts in examinership and schemes of arrangement, Ireland’s two main corporate rescue processes.
In this difficult economic environment, sometimes a company cannot be rescued and an insolvency process, such as a creditors voluntary liquidation, is the most appropriate option.