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CIA/E T N
JANUARY/FEBRUARY 1982
The Calling and Conduct
of a Creditors Meeting in
a Voluntary Winding-Up
by
Nicholas G. Comyn, Solicitor.
When Called?
The voluntary liquidation of a Company is
commenced at a General Meeting, which passes the
Resolution to wind up (Section 253); in the case of a
Creditors' voluntary winding up, the Resolution is an
ordinary Resolution, (Section 251 (c) ).
Section 266 (1) of the Companies Act, 1963 provides:
"the Company shall cause a meeting of the Creditors of
the Company to be summoned for the day, or the day
next following the day, on which there is to be held the
meeting at which the Resolution for voluntary winding
up is to be proposed, and shall cause the notices of the
said meeting of Creditors to be sent by post to the
Creditors at least ten days before the date of the said
meeting of the Company". The relevant periods for the
calling of the Creditors' Meeting are therefore two:
(a) at least ten days notice to the Creditors, by post
and
(b) to be held the day of or the day after the General
Meeting of the Company.
In practice, both meetings are usually held on the
same day, the Creditors' Meeting being held immedia-
tely after the General Meeting.
Form of Notice
The essential characteristics of the Notice convening
the Creditors' Meeting are governed by the Companies
Act, 1963 i.e. the meeting is called to discuss (a) the
Statement of Affairs, (b) the appointment of a
Liquidator and (c) the appointment of the Committee of
Inspection. In addition to setting out these facts, the
Notice should state where and when the meeting is to be
held and, in practice, the Notice will request the
Creditor to submit a Statement of the amount due to
him by the Company. Every Notice must have attached
to it two forms of proxy, a general proxy and a special
proxy, as provided for in Rule 77 of Statutory
Instrument No. 28 of 1966.
A form of general proxy provides that the proxy
appointed may vote at his discretion at the meeting of
the Creditors or any adjournment thereof. The form of
special proxy provides that the proxy may only vote at
the Creditors' Meeting as directed, for or against the
specified resolution - this pre-supposes, a matter often
overlooked, that the form of special proxy itself should
specify the proposals to be put to the Creditors' Meeting
and the person to be appointed Liquidator. Included in
both the general and special form of proxy is a
condition that the proxy when signed be lodged within a
time and at an address named by the person convening
the meeting at which it is to be used.
Execution of the Proxy
Note (2) to the form of general and special proxy in
Statutory Instrument No. 28, 1966 is the kernel and
provides that "a firm
executes by A.B. a
partner in the said firm". If the appointer is a corpora-
tion, then the form of proxy must be executed under its
Common Seal or under the hand of some officer duly
authorised in that behalf and the fact that he is so
authorised must be so stated. If execution is by an
authorised officer, then a copy of the Resolution
authorising him should be lodged with the proxy (on a
strict interpretation of Rule 75 of the Statutory
Instrument No. 28 and of Section 139 (1) (b) of the
Companies Act, 1963). Unfortunately, the Rules do not
provide what happens if the proxy is not properly
executed and it is not clear whether a managing director,
in the ordinary course of the Company's business, will
have power to sign such a proxy. In general, as it is a
normal commercial transaction of a Company, a
managing director would seem to have authority to sign
a proxy form. Rule 83 (1) provides that the time for the
return of the proxies is by four o'clock the day before
the Creditors' Meeting.
Solicitor's Role in the preparation of the Statement
of Affairs:
The Statement of Affairs, which must be produced at
the Creditors' Meeting and which is the responsibility of
the Directors (Section 266 (3) (a) of the Companies Act,
1963), is normally the preserve of the Company's
accountant or financial controller. However, a Solicitor
has a certain role to play, which is to advise that a
realistic value is taken of the assets, that proper treat-
ment is made of secured debts, that all preferential debts
are provided for, that Hire Purchase Agreements are
specified, that any "claim" for reservation of title is
noted and finally, in particular, to ensure that a full list
of Creditors and the amounts due to them is drawn up.
If there is a dispute as to any debt due to any Creditor,
then this should be noted, as it has consequences under
Rule 69 of Statutory Instrument No. 28.
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