A company may be wound up voluntarily by its creditors (Section 586).
This kind of winding up may be initiated by the company in general meeting. A resolution must be passed to the effect that the company’s liabilities prevent it from continuing in business, and the liquidation will be as a creditors’ voluntary winding up.
This course of action can be taken:
• If the liquidator in a members’ voluntary winding up believes that the company will not be in a position to pay its debts in full – within the time specified in the directors’ declaration – and creditors meeting is called and held (see here – Section 584).
• If, in a members’ voluntary winding up, the Court makes an order on foot of a creditor applying to it, where the creditor did not believe the company would be able to discharge its liabilities in time.
• If certain declarations are not made in accordance with the Summary Approval Procedure (Section 586(3)).
The meetings of creditors was governed by Section 266 of the 1963 Act. They are now dealt with here (Section 587).
The only new elements are subsections (3) (4) and (5). They deal with notice.
The essential points are as follows: Notice of the meeting must be sent to each creditor at least 10 days before the date of the meeting. The notice must state the date, time and location of the meeting; the name and address of the proposed liquidator; and attach a list of all the creditors.
The offences for non-compliance are set out in subsections (10) and (11).