The Gazette 1990

GAZETTE

PRIL

1990

issued in its name. Neither can all

the shareholders, in their own

names

issue the

intended

" . . . Section 28 of the Stete

Property Act 1954 expressly

provides thet where e

compeny hes been dissolved

ell reel end personsl

property . . . vests in the

Stste

proceedings. Such right of action,

if any, which subsisted constituted

an asset of the company and

therefore under Section 28 it is

now vested in the State.

Proceedings would accordingly

have to be issued in the name of

the Minsiter for Finance.

The Position of Creditors

The adverse effects of dissolu-

tion are potentially even more

serious for the

company's

creditors. Just as the company can

no longer sue after dissolution,

similarly all personal rights of action

against the company are lost.

Consequently, the company's

unsecured creditors can expect to

receive no payment in respect of

monies owing to them.

The position of the secured

creditors is, however, somewhat

better. After dissolution, such land

as belonged to the company will

vest in the State, subject to the

same charges, encumbrances, etc

as existed prior to dissolution.

other words, the State can claim no

better title to the land than that

which was previously held by the

company. This protects the position

of creditors whose security was

represented by the company's land.

However, as regards other

creditors whose security was over

pure personalty, they would no

longer appear to have a right of

recourse against any particular

assets. This would include for

example, the creditor who had a

floating charge over the stock-in-

trade of the company. Upon

dissolution his security, in effect,

ceases to exist and he is placed in

the same position as an unsecured

creditor, in that he cannot expect

to receive any payment in respect

of monies owing to him.

Re Kavanagh and Cantwell

The circumstances of this case

were that certain property was held

on trust by one company for

another pending the transfer to the

latter of the legal title. The first

company went into liquidation and

was ultimately dissolved. However,

owing to an oversight, the legal title

to the property was never trans-

ferred to the second company.

In proceedings before Costello J.

the question was raised as to

whether the title to the property

had vested in the State subsequent

to the dissolution. However, the

Attorney General wrote to the

Court indicating that the State did

not claim the property. This, it is

submitted is the correct view. In

Section 28 of the 1954 Act it is

expressly stipulated that property

subject to a trust does not vest in

the State.

Having determined that the State

had no interest in the land, the

issue that was presented to the

court was how to convey the legal

title to the second company. The

answer, according to Costello J,

was to be found in Section 26 of

the Trustee Act 1893. This section

provides that where a trustee

entitled to any land 'cannot be

found', the court may make a

vesting order vesting the land in

'any such person in any such

manner and for any estate as the

Court may direct'. Costello J. held

that as the first company no longer

existed in the eyes of the law and

as the Attorney General had stated

that no claim to the premises was

being made by the State, this was

therefore a case in which the

trustees of the trust could not be

found. He accordingly made an

order, pursuant to Section 26 of the

1893 Act, that the legal title to the

premises should vest directly in the

second company.

" . . . the company's

unsecured creditors can

expect to receive no

payment . . . "

Presumably, if the facts had been

slightly different, and prior to

dissolution, the property had been

held by the company subject to a

mortgage or charge rather than

subject to a trust, the property

would have automatically vested in

the State. In such a case, the legal

title could then have been quite

simply conveyed by a deed of

transfer, executed by the Minister

Irish Stenographers

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(Director:

Sheila Kavanagh)

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Fast, efficient service.

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Contact: Secretary,

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for Finance. Alternatively, the

company could have been restored

to the register pursuant to Section

12(6) of the 1982 Act (as to which,

see below) and the company itself

could have then effected the

transfer.

The Position of Employees

An interesting point arises in

relation to the company's em-

ployees. Where a company is being

wound up, the employees may rank

to an extent as preferential

creditors.

Indeed, they may also

be entitled to payment out of the

Redundancy Fund pursuant to the

terms of the Protection of Em-

ployees (Employer's Insolvency)

Act 1984.

Different consideratiaons arise

where the company has not been

wound up prior to dissolution. The

contracts of employment undoubt-

edly constituted property of the

company. But do they vest in the

State after the company has been

dissolved?

Contracts

employment are personal contracts

of service, and the authorities

indicate that once either party to

that contract dies (dissolution

being after all, the legal death of the

company) then that contract

automatically terminates.

these cases represent the law, then

the employees will lose their jobs

upon dissolution, perhaps being

owed arrears of wages.

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