In re Fine Industrial Commodities Ltd: ChD 1956

The Court considered the payment of interest to simple contract creditors. The company had been wound up on the ground of insolvency. In the course of the winding up the liquidators brought an action to set aside a debenture. The action was successful and the liquidator recovered sufficient funds to enable him to pay out the contract creditors in full and leave a surplus. The liquidator sought directions from the court as to whether he could pay interest to creditors on the amount of their respective proofs from the commencement of the winding up to the date of payment.
12 It was only if s 33(8) of the Bankruptcy Act was picked up by s 317 of the Companies Act that the simple contract creditors (whose contracts did not entitle them to interest) would be entitled to interest on their respective debts. The judge, Vaisey J, held that s 317 had ceased to have application to the company as soon as it was discovered that there was a surplus.
Vaisey J said: ‘Although for some purposes during the winding-up proceedings this company must have been deemed to have been insolvent, it seems to me that when the time comes for dealing with the surplus it must no longer be deemed to be an insolvent company, but has to be treated as a company which is, and was, and always has been, solvent.’
Vaisey J
[1956] Ch 256
Companies Act 1948 316 317
England and Wales
Cited by:
CitedLB Holdings Intermediate 2 Ltd, The Joint Administrators of v Lehman Brothers International (Europe), The Joint Administrators of and Others SC 17-May-2017
In the course of the insolvent administration of the bank, substantial additional sums were received. Parties appealed against some orders made on the application to court for directions as to what was to be done with the surplus.
Held: The . .

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Updated: 19 February 2021; Ref: scu.641423