Page 236 - DCOM106_COMPANY_LAW

Unit 14: Winding Up of Companies

Self Assessment Notes

State whether the following statements are true or false:
12. In the case of compulsory winding up, the official liquidator, by virtue of his office,
becomes the liquidator of the company.

13. The terms ‘liquidation’ and ‘dissolution’ can be used interchangeably.
14. An unregistered company can be wound up either voluntarily or by court.
15. Any transfer of property, movable or immovable, or any delivery of goods made by a
company within a period of one year before the commencement of its winding up is void
as against the liquidator.
16. The liquidator has an absolute power to disclaim onerous property of a company.

Case Study How to avoid Compulsory Liquidation

rotecta (Plymouth) Limited (a fictional company) is a security services company
providing security guards to other businesses. The company has 50 employees. The
Pcompany has minimal overheads, apart from the “wage cost” of the employees.
The company had four main customers, the largest of which failed leaving Protecta
(Plymouth) Limited with a bad debt of £ 100,000. Since that bad debt was incurred three
months ago the company has recovered its previous level of turnover, but that turnover is
now spread over ten customers.
The cash flow reduction of £ 100,000 caused by the bad debt resulted in Protecta (Plymouth)
Ltd “stretching the due dates” of the payments needed to be made to the company’s
creditors. One of those creditors issued a winding up petition two weeks ago and the court
is to consider whether or not to make a winding up order at a hearing set to take place in
three weeks time.
As soon as they receive the winding up petition the directors of Protecta (Plymouth) Ltd
arrange to see a turn around specialist.
The realisable assets of the company are determined to be:

£
Good trade debtors 170,000
Five vans 25,000
Office equipment 2,000
Goodwill ?
Total realisable value of assets 197,000

Contd...

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