The liquidators in a creditors voluntary liquidation converted foreign currency debts of the company into Sterling at the rate of exchange prevailing at the date of the resolution to wind up. As a result of the depreciation of Sterling against the Swiss Franc, the creditor bank, on converting their Sterling dividends into Swiss Francs, received only 58.7% of the 18.5 million Swiss Francs owed to them by the company. The bank sought to recover the loss from the surplus after paying all the provable debts. The liquidators applied to the English court for directions.
Held: The bank’s foreign currency debt was properly converted at the date the resolution was passed to wind up the company and they were not entitled to further participate in the assets of the company.
A winding up petition is sui generis, being in the nature of a wider legal proceeding available for the collective enforcement of the admitted or proved debts of the company for the benefit of the general body of creditors on a pari passu basis. The court may incidentally in the course of bankruptcy proceedings have to establish rights which are challenged: proofs of debt may be rejected; or there may be a dispute over whether or not a particular item of property belonged to the debtor and is available for distribution. There are procedures by which these questions may be tried summarily within the bankruptcy proceedings or directed to be determined by ordinary action. But these are incidental procedural matters and not central to the purpose of the proceedings.
Brightman LJ said (obiter) that he had ‘not heard any convincing objection’ to the notion that, in a solvent liquidation, the liquidator should ‘make good the shortfall before he pays anything to the shareholders’.
Judges:
Brightman, Lawton and Oliver LJJ LJ
Citations:
[1983] Ch 1, [1982] 2 WLR 1010, [1982] 2 All ER 183
Jurisdiction:
England and Wales
Cited by:
Cited – In re Telewest Communications Plc ChD 26-Apr-2004
A scheme of arrangement had been proposed. The creditor complained that in providing for payment in a currency other than that agreed, it had been prejudiced.
Held: The provision in the scheme did purport to alter the claimant’s rights. . .
Cited – Ridgeway Motors (Isleworth) Ltd v Alts Ltd CA 10-Feb-2005
The company appelaed a refusal of the judge to strike out a winding up petition. They said the petition was based upon a judgment which was now time barred. The petitioner replied that such a petition was not an action under the section.
Held: . .
Cited – McGrath and Honey v McMahon and Others, Re HIH Casualty and General Insurance Ltd and others CA 9-Jun-2006
The insurance company was to be wound up. It operated internationally but was registered in Australia. The Australian liquidator now sought an order for the transfer of assets held here to Australia.
Held: It was inevitable that cross border . .
Cited – Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors (of Navigator Holdings Plc and Others) PC 16-May-2006
(Isle of Man) A scheme of arrangement was proposed for a company with involvement in several jurisdictions. An order in New York sought assistance in the vesting of shares and assets in the Isle of Man in the creditors committee. Cambridge was a . .
Cited – LB 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 . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Company
Updated: 03 August 2022; Ref: scu.197913
