THE COMPANIES ORDINANCE, 1972

(iv) PROVISIONS APPLICABLE TO EVERY MODE OF WINDING UP

Proof and ranking of claims

276. In every winding up (subject in the case of insolvent companies to the application in accordance with the provisions of this Ordinance of the law of bankruptcy) all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of such debts or claims which are subject to any contingency or sound only in damages, or which for some other reason do not bear a certain value.

277.—(1) In the winding up of an insolvent company the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors, to the debts and claims which may be proved and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of bankruptcy with respect to the estates of persons adjudged bankrupt, and all persons who under such rules would be entitled to prove for and receive dividends out of the assets of such a person may make such claims against the company as they respectively are entitled to by virtue of this section.

(2)  In the winding up of a company it shall be assumed that the company is insolvent until it appears, by the reduction of assets of the company to the possession or control of the liquidator, and the recovery by the liquidator of debts and liabilities recoverable by the company, that there will be sufficient to satisfy all debts and claims against the company in full.

(3)  If the assets mentioned in the last foregoing subsection are sufficient to satisfy debts and claims against the company which would be provable against the estate of ;a person adjudged bankrupt, but not also to satisfy other claims against the company, the assets shall be applied primarily in satisfying the first mentioned claims, and any surplus shall be applied toward discharging the other claims rateably as between themselves.

(4)  For the purposes of this Part of this Ordinance creditor of a company who is entitled to a privilege over any of its assets under articles 2102 or 2103 of the Civil Code shall be deemed to be a secured creditor and to have a security upon the assets over which the privilege exists.

(5) In the winding up of any company any privilege or judicial hypothecation obtained under articles 2101 or 2123 of the Civil Code shall be void, and a creditor claiming any such rights shall be deemed to be an unsecured creditor.

278.—(1) In a winding up there shall be paid in priority to all other debts or claims against the company—

(a)   all income tax and other taxes assessed on the company up to the 31st day of December next preceding the date on which the winding up order was made or the winding up resolution was passed (whichever is the earlier), but not exceeding in the whole one year's assessment, the year for which priority is claimed being selected by the Chief Income Tax Officer ;

(b)   all wages or salary (whether or not earned wholly or in part by way of commission) of any clerk or servant in respect of services rendered to the company during four months next before the date on which the winding up order was made or the winding up resolution was passed (whichever is the earlier), and all wages (whether payable for time or for piece work) oi any workman or labourer in respect of services so rendered, being a sum which in the case of any one claimant does not exceed two thousand rupees ;

(c)   unless the company has at the commencement of the winding up under such a contract with insurers as is mentioned in section 24 of the Workmen's Compensation Ordinance, 1970 rights capable of being transferred to and vested in the workman, all amounts due in respect of any compensation or liability for compensation under the said Ordinance, being amounts whicfi have accrued before the date on which the winding up order was made or the winding up resolution was passed (whichever is the earlier).

(2) Any remuneration in respect of a period of holiday or of absence from work through sickness or other good cause, or in respect of a period for which notice of dismissal has or should have been given under section 12 of the Employment of Servants Ordinance, shall be deemed to be wages in respect of services rendered to the company during that period.

(3)  Where any compensation under the Workmen's Compensation Ordinance, 1970 is a weekly payment, the amount due in respect thereof shall, for the purposes of paragraph (c) of subsection (1), be taken to be the amount of the lump sum for which the weekly payment could, if redeemable, be redeemed if the employer made an application for that purpose under the said Ordinance.

(4)  If any person : —

(a)   lends money to a company to enable it to satisfy, in whole or part, a debt or claim which is, or which if not so satisfied would be, a debt or claim to which priority is given by subsection (1); or

(b)   guarantees or gives security for the payment of any such debt or claim, and either before or after a winding up order is made or a winding up resolution is passed in respect of the company, satisfies the debt or claim, in whole or part, by paying it himself or by the security given by him being realised ;

that person shall in the winding up of the company be entitled to priority under subsection (1) for the amount of the loan made by him, or for an indemnity in respect of the guarantee or security given by him, to the extent that the amount of the debt or claim which was satisfied out of the loan, or by that person, or out of the security given by him, has been diminished.

(5)  For the purpose of the last foregoing subsection : —

(a)   a loan shall include any form of advance and an overdraft at a bank ;

(b)   a person shall be deemed to have given a guarantee or security if he is personally liable to satisfy a debt or claim by a rule of law or an enactment, or if any of his assets may be seized, distrained upon or sold in order to satisfy the debt or claim, or if any of his assets are charged with the debt or claim or are ordered to be sold by order of any court in order to satisfy it;

(c)   a person who lends money to a company to enable it to pay any of its debts, or who gives a guarantee or security in respect of all its debts, or all its debts of a particular class, shall be deemed to have made a loan to enable it to satisfy debts or claims to which priority is or would be given by subsection (1), or to have guaranteed or given security for such debts or claims, to the extent that the loan is actually used to satisfy such debts or claims, or to the extent that the guarantor or the person giving the security satisfies them, or to the extent that they are satisfied by the realisation of the security, whether the contract of loan or guarantee or the instrument creating the security expressly refers to such debts or claims or not; and

(d) a security shall be deemed to be realised if any of the assets subject to it are sold or are ordered by a court to be sold, or if a receiver is appointed in respect of any of those assets, or if the person entitled to the security takes possession of any of those assets.

(6)  The debts and claims to which priority is given by subsections (1) and (4) shall—

(a)   rank equally among themselves and be paid in full, unless the assets of the company are insufficient to meet them, in which case they shall abate in equal proportions ; and

(b)   so far as the assets of the company available for payment of all its debts and liabilities are insufficient to meet them, have priority over the claims of creditors and debenture holders secured by general floating charges created by the company, and be paid accordingly out of any property comprised in or subject to such charges

(7)  Subject to the retention of such sums as may be necessary for the costs and expenses of the winding up, the debt? and claims to which priority is given by subsections (1) and (4) shall be discharged forthwith so far as the assets of the company are sufficient to meet them, and in the case of debts to which priority is given by-paragraph (c) of subsection (1), formal proof thereof shall not be required.

Provided that nothing contained in this subsection shall give any priority to the costs and expenses of the winding up over the amounts secured by a general floating charge created by the company.

(8)  In the event of a landlord or other person having distrained or enforced a privilege under article 2102 of the Civil Code on any goods or effects of the company within three months next before the date of a winding up order or resolution, the debts to which priority is given by this section shall be a first charge on the goods or effects so distrained on or over which the privilege is exercised or the proceeds of the sale thereof :

Provided that, in respect of any money paid under any such charge, the landlord or other person shall have the same rights of priority as the person to whom the payment is made.

(9)  Subsection (5) shall also apply in the circumstances in which section 20 of the Companies (Debentures and Floating Charges) Ordinance, 1970 applies.

279.—(1) Any transfer, mortgage, charge, hypothecation or pledge over any assets, or any delivery of goods, or payment, or proceedings or execution or other act relating to assets of a company created, made or done within six months before the commencement of the winding up of a company at a time when it cannot pay its debts as they fall due, with a view to giving any creditor of or surety for the company a preference over its other creditors, shall in the event of the company being wound up be deemed a fraudulent preference of its creditors and be invalid accordingly.

(2) Any transfer or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void to all intents.

280.—(1) If anything created, made or done is void under section 279(1) as a fraudulent preference of a person interested in assets, mortgaged, charged, hypothecated or pledged to secure the company's debt, then (without prejudice to any rights or liabilities arising apart from this provision) the person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had undertaken to be personally liable as a surety for the debt to the extent of the charge on the property or the value of his interest, whichever is the less.

(2)  The value of the said person's interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encumbrances other than those to which the charge for the company's debt was then subject.

(3)  On any application made to the court with respect to any payment on the ground that the payment was a fraudulent preference of a surety, the court shall have jurisdiction to determine any questions with respect to the payment arising between the person to whom the payment was made and the surety and to grant relief in respect thereof, notwithstanding that it is not necessary so to do for the purposes of the winding up, and for that purpose may give leave to bring in the surety as a third party as in the case of an action for the recovery of the sum paid. This subsection shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies in relation to payments.

281.—(1) Where any part of the assets of a company which is being wound up consists of interests in land burdened with onerous servitudes or obligations, of shares or stock in companies, of unprofitable contracts, or of any other assets which are unsaleable, or not readily saleable, by reason of the person entitled thereto being liable to perform any onerous act, or to pay any sum of money, the liquidator of the company, notwithstanding that he has endeavoured to sell or has taken possession of the assets, or exercised any act of ownership in relation thereto, may with the leave of the court and subject to the provisions of this section, by writing signed by him, at any time within twelve months after the commencement of the winding up or such extended period as may be allowed by the court, disclaim the assets :

Provided that where any such assets have not come to the knowledge of the liquidator within one month after the commencement of the winding up, the power under this section of disclaiming the property may be exercised at any time within twelve months after he has become aware thereof, or such extended period as may be allowed by the court.

(2) The disclaimer shall operate to determine, as from the date of disclaimer, the ownership, rights, interest, and liabilities of the company in or in respect of the property to which the disclaimer relates, but shall not, except so far as is necessary for the purpose of releasing the company and the assets of the company from liability, affect the rights or liabilities of any other person.

(3)  The court, before or on granting leave to disclaim, may require such notices to be given to persons interested. and impose such terms as a condition of granting leave, and make such other order in the matter as the court thinks just.

(4)  The liquidator shall not be entitled to disclaim any assets under this section in any case where an application in writing has been made to him by any person interested in the property concerned requiring him to decide whether he will or will not disclaim, and the liquidator has not, within a period of twenty-eight days after the receipt of the application or such further period as may be allowed by the court, given notice to the applicant that he intends to apply to the court for leave to disclaim, and, in the case of a contract, if the liquidator, after such an application as aforesaid, does not within the said period or further period disclaim the contract, the company shall be deemed to have adopted it.

(5)  The court may, on the application of any person who is, as against the liquidator, entitled to the benefit or subject to the burden of a contract made with the company, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the court thinks just, and any damages payable under the order to any such person may be proved by him as a debt in the winding up.

(6)  The court may, on the application by any person who either claims any interest in any property in respect of which the liquidator has executed a disclaimer, or of any person who is under any liability not discharged by this Ordinance in respect of any such property, and on hearing any such persons as it thinks fit, make an order for the vesting of any interest in the property in, or the delivery of the property to, any persons entitled thereto, or in whom it may seem just that any such interest should be vested, or to whom it may seem just that such property should be delivered by way of compensation for such liability as aforesaid, on such terms as the court thinks just, and on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any transfer or assignment for the purpose :

Provided that, where the assets disclaimed are of a leasehold nature, the court shall not make a vesting order in favour of any person claiming under the company, whether as under-lessee or as a person entitled to a mortgage, charge or hypothecation, except upon the terms of making that person—

(a)   subject to the same liabilities and obligations as those to which the company was subject under the lease in respect of the property at the commencement of the winding up; or

(b)   if the court thinks fit, subject only to the same liabilities and obligations as if the lease had been transferred by the company to that person at that date;

and in either event (if the case so requires) as if the lease had comprised only the property comprised in the vesting order, and any under-lessee or person entitled to a mortgage. charge or hypothecation who declines to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property, and, if there is no person claiming under the company who is willing to accept an order upon such terms, the court shall have power to vest an interest equivalent to that which the company had in the property in any person liable either personally or in a representative character, and either alone or jointly with the company, to perform the lessee's covenants in the lease, freed and discharged from all encumbrances and interests created therein by the company.

(7)  Any person injured by the operation of a disclaimer under this section shall be deemed to be a creditor of the company to the amount of the injury, and may accordingly prove the amount as a debt in the winding up.

(8)  A vesting order may be made under this section in favour of a person who is directed to hold the interest vested in him thereby on behalf of other persons, being persons in whose favour a vesting order could be made under subsection (6), and in particular a vesting order may be made in favour of a trustee of a debenture trust deed on behalf of the holders of debentures covered by the trust deed.

282.—(1) Where a creditor has issued execution against any assets of a cornpany, and the company is subsequently wound up, he shall 'not be entitled to retain the benefit of the execution against the liquidator in -he winding up of the company, unless he has completed the execution before the commencement of the winding up :

provided that—

(a) where any creditor has had notice of a meeting having been called at which a resolution for voluntary winding up is to be proposed, the date on which the creditor so had notice shall for the purposes of the foregoing provision be substituted for the date of the commencement of the winding up ; and

(b) a person who purchases in good faith any assets of a company sold to him under a warrant, writ or order of the court for the execution of any judgment or decree shall in all cases acquire a good title to them against the liquidator.

(2) An execution shall be taken to be completed : —

(a) in the case of coins, bank notes, securities for money payable to bearer and shares or debentures represented by bearer certificates, by their seizure under a warrant of execution ;

(b)   in the case of tangible moveables, by their seizure and sale under a warrant of execution ;

(c)   in the case of the attachment of a debt, by the court making or validating an order for the attachment;

(d)   in the case of money or securities for money in court, by the making of an order of the court that such money or securities shall be paid or transferred to the judgment creditor;

(e)   in the case of shares or debentures of any company or stock or other securities issued by the Government of Seychelles or any government, public authority or local authority (whether in Seychelles or not), not being shares, debentures, stock or securities within paragraph (a) of this subsection, by the making of an order of the court charging the shares, debentures, stock or other securities with the amount payable to the judgment creditor ;

(f) in the case of any moveable property not within paragraphs (a), (b), (c) or (d), by the appointment of a receiver by way of equitable execution ; and

(g) in the case of land in Seychelles, by—

(i) the seizure of the land under a writ of possession ; or

(ii) the making of an order for the sale of the land; or

(iii) the appointment of a receiver by way of equitable execution.

(3) In this section the expression "the benefit of the execution" means the right of the judgment creditor to proceed with the execution and to obtain payment thereby of the amount payable to him, but does not include the right to retain payments made on account of the judgment debt or the judgment creditor's costs, or to retain amounts recovered by the partial realisation of any assets which are the subject of the execution.

283.—(1) Where any goods of a company are taken in execution, and, before the completion of the execution. notice is served on the registrar that a provisional liquidator has been appointed or that a winding up order has been made or that a resolution for voluntary winding up has been passed, the registrar shall, on being so required, deliver the goods and any money seized or received in part satisfaction of the execution to the liquidator, but the costs of the execution shall be a first charge on the goods or money so delivered, and the liquidator may sell the goods, or a sufficient part thereof, for the purpose of satisfying that charge.

(2) Where under an execution in respect of a judgment for a sum exceeding one thousand rupees the goods of a company are sold or money is paid in order to avoid seizure or sale, the registrar shall deduct the costs of the execution from the proceeds of the sale or thfe money paid and retain the balance for fourteen days, and if within that time notice is served on him of a petition for the winding up of the company having been presented or, of a meeting having been called at which there is to be proposed a resolution for the voluntary winding up of the company, and an order is made or a resolution is passed, as the case may be, for the winding up of the company, the registrar shall pav the balance to the liquidator, who shall be entitled ro retain it as against the execution creditor.

(3)  In this section the expression "goods" means all tangible moveables, coins, bank notes, securities for money payable to bearer and shares and debentures represented by bearer certificates, and the expression "registrar" means the registrar of the court or any other officer charged with the execution of a warrant or writ or other process of execution.

(4)  An execution against goods shall be taken to be completed for the purpose of this section in the circumstances mentioned in paragraphs (a) and (b) of section 282(2).

284.—(1) If a company is wound up by the court, or is wound up voluntarily by way of a creditors' voluntary winding up, any execution or distress or the enforcement of a privilege under article 2102 of the Civil Code commenced against the company's assets after the commencement of the winding up shall be void.

(2)  The court may direct that the foregoing subsection shall apply as from the date of the order of the court in the case of a member's voluntary winding up, and an application to the court may be made for this purpose by the liquidator or a creditor, shareholder, contributory or debenture holder of the company, but the court shall accede to the application only if a prima facie case is established that the company is unable to pay its debts within the meaning of paragraph (c) of section 206.

(3)  Subsection (1) of this section shall apply to a company which is wound up by way of a members' voluntary winding up as from the date when the winding up becomes a creditors' voluntary winding up under section 257.

285.—(1) The court may, notwithstanding anything contained in sections 282, 283 and 284 empower a creditor or a person who, apart from this Ordinance, is entitled to levy execution or a distress, or to enforce a privilege under article 2102 of the Civil Code : —

(a) to commence or to proceed with a process of execution or distress, or the enforcement of the privilege ;

(b)   to receive, recover or retain the proceeds of an execution or distress, or the proceeds of enforcing the privilege, or any money paid to avoid or delay an execution or distress or the enforcement of the privilege ; and

(c)   to require the registrar of the court, or any officer charged with the execution of a warrant or writ or other process of execution, or the liquidator of the company, to account to that creditor or person for the proceeds of sale of any assets of the company.

(2) In deciding whether to exercise its powers under this section the court shall take into account the conduct of the company, of the person who applies to the court to exercise its powers in his favour and of the creditors of the company generally.