Debentures creating a charge had been issued, but not registered within 21 days. On 1 November 1901, an order was made with the usual proviso (‘without prejudice to the rights of parties acquired prior to the time when such trust deed and debentures shall be actually registered’) extending time until 15 November 2001. The charge was registered on 15 November 2001. In the meantime, on 11 November, the company passed a resolution for voluntary winding up.
Held: The proviso protected the whole general body of creditors. At the commencement of a winding up: ‘On November 11, 1901, by force of the Act of Parliament, the undertaking and assets of the company passed under the control of the liquidator, whose duty it was to convert them into money, and out of the proceeds to pay the creditors existing at that date. The assets have been said to be impressed in the hands of the liquidator with a statutory trust in favour of the creditors. Upon the commencement of the winding-up an immediate duty was cast upon the liquidator to collect the assets and distribute them among the creditors then existing. At that moment the debenture-holders were unsecured creditors of the company, for they did not hold any security registered as required by the Act of 1900. It has been argued on behalf of the debenture-holders that when registration was made on November 15, 1901, there arose a security which was not in existence at the date when the liquidation commenced. But whether that was so or not, the order extending the time for registration was made ‘without prejudice to the rights of parties acquired prior to the time when such trust deed and debentures shall be actually registered.’ Whatever the exact limit of those words may be, they certainly in my judgment include the rights of creditors, acquired on the passing of the winding up resolution, to have the assets realized and distributed among them pari passu.’
Judges:
Buckley J
Citations:
[1903] 1 Ch 914
Jurisdiction:
England and Wales
Cited by:
Cited – Rehman v Chamberlain and Another ChD 6-Sep-2011
The claimant asserted as against the liquidator, a floating and registered charge over the company’s assets. The liquidator said that it had been granted within the twelve months prior to the onset of the insolvency, was caught by section 245(3)(b), . .
Lists of cited by and citing cases may be incomplete.
Company, Insolvency
Updated: 10 September 2022; Ref: scu.444537