B24 Inv Liquidation PDF

B24 INV - 1\. LIQUIDATION - \(a) Overview of Liquidation - Part 8 of the IRDA Commencement of Winding Up: Sections 126 and 161(6) of the IRDA A winding up is usually a **[last resort]** because it ends up in the dissolution o...

B24 INV - 1\. LIQUIDATION - \(a) Overview of Liquidation - Part 8 of the IRDA Commencement of Winding Up: Sections 126 and 161(6) of the IRDA A winding up is usually a **[last resort]** because it ends up in the dissolution of a company. \(b) Winding Up by the Court (**[Compulsory]**) - \[Odelia\] Advantages/ Disadvantages of winding up - Advantages - Disadvantages - - - - Locus Standi: **[Section 124 of the IRDA]** - - - **[Who]** can apply? - - - - - - - - - **[Procedure]** - Court's discretion to decline to grant winding up order: Section 128 of the IRDA Grounds - \(i) Inability to pay debts / Test for Insolvency - **[3 ways]** to establish **[inability to pay debts]** - Sections 125(1)(e) and 125(2) of the IRDA Judgement or decree Failur to meet Statutory demand: s125(2) IRDA \> 15,000 - - - - Cashflow insolvency test vs Balance sheet insolvency test: Sun Electric Power Pte Ltd v RCMA Asia Pte Ltd \[2021\] SGCA 60 a. b. c. d. e. f. g. h. - \(ii) Presumption of Insolvency - Section 125(2) of the IRDA - 3 weeks from service of statutory demand (**[not letter of demand]**) - **[Was the option to compound provided?]** BNP Paribas v Jurong Shipyard Pte Ltd \[2009\] 2 SLR(R) 949 - \(iii) Disputing a debt on substantial grounds - BNP Paribas v Jurong Shipyard Pte Ltd \[2009\] 2 SLR(R) 949 - Metalform Asia Pte Ltd v Holland Leedon Pte Ltd \[2007\] 2 SLR(R) 268 - Mohd Zain bin Abdullah v Chimbusco International Petroleum (Singapore) Pte Ltd \[2014\] 2 SLR 446 - **[Both types]** of voluntary liquidation are **[commenced by the company]**. - \(c) **Members' Voluntary** Winding Up (Solvent liquidation) - Sections 160 to 165 of the IRDA - s160 - \>75% - - - s161 - - - s162 - s163 \> 12 months after commencement of winding up - s164 - at least one or more liquidator - s165 - If the liquidator is of the view that the company is unable to pay its debts, then call creditor\'s meeting - \(d) **Creditors' Voluntary** Winding Up - Sections 160 to 163, and 166 to 170 of the IRDA - s160 s161 s162 - To cease to carry on its business - s163 - Members' voluntary winding up when company is still solvent - s166 - 10 days notice of the meeting of creditors - s167 - Company can choose the liquidator - - - - - - - - - s168 - Director\'s affidavit to concurr in the statement of affairs - s169- committee of inspection appointed to represent the interest of the creditor as a whole - s170 - any disposal or disposition of property, post winding-up is void. - \[Odelia\] Members v Creditors winding up - depends on whether the company is solvent or insolvent - - - - - \(e) Effect of Winding Up - \(i) Moratorium on legal and enforcement proceedings - **[ Court Winding Up]**: Sections 129, 130, and 133 of the IRDA - s129 - Court may stay or restriant proceedings against wuond up company - s130 - Avoidance of dispositions by wound up company - s133 - No action to be commenced against company - - - Section 206 of the IRDA and Section 334 of the Companies **[creditors cannot retain the benefit of uncompleted execution]** - Functus Officio - The Liquidator and remuneration - Statement of Affairs - Members' Creditors' Voluntary Winding Up: Sections 162 and 170 of the IRDA - s162 - restriction against share transfer and alteration in the member\'s status - s170 - No enforcement against estate and no action against company - \(i) Provable Debts - Section 218(1) & (2) of the IRDA - - - - s218(3)-(8) - Insolvency set-off: Section 219 of the IRDA - - - - - - Interest on debts: Section 222 of the IRDA - - - Insolvency set-off: Law and Practice of Corporate Insolvency (2014, LexisNexis), Chapter VI \[1905 -- 2101\] - What happens in a regular set-off? What happens in an insolvency set-off? conversion date for foreign currency claims - \(h) The Pari Passu Principle of Distribution - Section 172 of the IRDA - **[Pari Passu]** - **[Preferential payments]** and priorities amongst **[unsecured debts]**: Section 203 of the IRDA 1. 2. 3. 4. 5. c. d. e. - What happens if there are insufficient assets to pay everyone? - Estate Costs Rule - Halsbury's Laws of Singapore on Insolvency, Volume 13 (2013 Reissue, LexisNexis Singapore), \[150.456 - 150.472\] - \[150.456\] Creditor\'s position prior to commencement of liquidation (Creditors to avoid claw back clauses) - \[150.457\] The pari passu principle - \[150.458\] Priority of payment - \[150.459\] Estate costs rule - \[150.460\] All costs and expenses of winding up (Top priority) - \[150.461\] Payment for costs without the need for passing - \[150.462\] Liquidator to bear costs proceedings - \[150.463\] All wages and salaries (2nd) - \[150.464\] All amounts due to an employee (3rd) - \[150.465\] All amounts due in respect of workmen\'s compensation (4th) - \[150.466\] All amounts due in respect of contributions payable (5th) - \[150.467\] All remuneration payable to any employee in respect of vacation leave (6th on the list) - \[150.468\] Amount of all tax assessed (penultimate on the list) - \[150.469\] Sums payable to employee under the Employment Act - \[150.470\] Insufficiency of funds to meet all debts (floating charge) - \[150.471\] Priority to third parties entitled to insurance - 150.472 Assets recovered under an indemnity for costs of litigation - 150.473 Position of unsecured creditors - Liquidator dissolution and release