The court was asked about a mortgage of the uncalled amounts on some partly paid shares and all the present and future property of the company. The issue was whether the mortgages extended to the calls to be made by the liquidator in the winding up of the company, so giving the mortgagees priority over the unsecured creditors.
Held: The appeal was rejected. The calls to be made by the liquidator were subject to the mortgages.
As regards In re Whitehouse and Co, Cotton LJ said: ‘Although the decision of the Master of the Rolls was right, yet in my opinion his observations upon the position of the liquidator, as regards a call made in the winding up upon a shareholder who is also a creditor of the company and claims a right to set-off his debt against the call, were, though unintentionally, erroneous; for he disallowed the set-off in that case, not on the true ground put by the Court of Appeal in Black and Co’s Case, but on the ground that a call is something that accrues to the liquidator, and is not a sum which is really due to the company, and that the shareholder’s debt is a debt due to him from the company and not from the liquidator.’
Any money paid under a call for unpaid capital cannot be treated as part of the property of the company concerned: it forms a statutory fund which can only come into existence once the company in question has gone into liquidation.
Judges:
Cotton, Lindley and Lopes LJJ
Citations:
(1890) 44 Ch D 534
Jurisdiction:
England and Wales
Citing:
Distinguished in part – In re Whitehouse and Co CA 1878
The Court was asked whether a contributory was entitled to set off a debt due to him from the company against calls made against him both by the company before the commencement of its liquidation and by the liquidator after the commencement of its . .
Cited by:
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: 08 August 2022; Ref: scu.641428