Split Task

This is an order of the Federal High Court that the affairs of a company be wound up.

Where a winding up order is made, copies of the order shall be forwarded by the

470 CWR, op cit, r. 22 (1).

471 CAMA, op cit, s. 411 (1).

472 Okafor v Igwilo [1997] 11 N.W.L.R. (pt 527) 36 at 51 – 52.

473 International Merchant Bank Nigeria Ltd v Speegaffs Company Nigeria Ltd, supra, at 435.

474Air Via Limited v Oriental Airlines Limited, supra; Ado Ibrahim & Co. Ltd v B.C.C. Ltd, supra, UBN Ltd v Tropic Foods Ltd [1992] 3 N.W.L.R. (pt 228) 231 at 250; Tony-Anthony‟s case, supra; F

Uzuegbunam, „Ecobank Loses in Court against Honeywell‟, Business Day Newspaper, June 29, 2016, p.

6.

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Registrar to the Official Receiver,⁴⁷⁵ who will then transmit a copy of the order to the Corporate Affairs Commission which shall make a minute thereof in its book relating to the company.⁴⁷⁶ The order for the winding up of a company shall be in Form 16 in the appendix with such variations as circumstances may require.⁴⁷⁷ The making of a winding up order by the court attracts some far-reaching consequences in the life of the company wound up.

2.11.1 Consequences of a Winding up Order

Where a winding up order is made, it elicits certain consequences, to wit;

i.Cessation of the Powers of Board of Directors of the Company

Where a winding up order is made, the powers of the board of directors of the company ceases and such powers is then invested on the liquidator, except the court by order⁴⁷⁸ or the liquidator⁴⁷⁹ sanctions the continuance of the power of the board of directors. It is doubtful if the board of directors of the company can exercise even residual powers without the authorisation of the court.

ii.Commencement, Transfer and Continuation of Actions and Proceedings

Where a winding up order is made, no action or proceeding shall be proceeded with or commenced against the company except by leave of court given on such terms as the court may impose.⁴⁸⁰

The consequence of winding up order as it relates to commencement of action or continuation of proceedings have been discussed in this chapter.

475 CWR, op cit, rr. 28, 29, 30 (1).

476 CAMA, op cit, s. 416.

477 CWR, op cit, r 29 (2).

478 CAMA, op cit, s. 422 (9); FMB Ltd v NDIC, supra.

479 Bodies Corporate (Official Liquidation) Act, op cit, s. 14.

480 CAMA, op cit, s. 417; Insolvency Act, op cit, s. 130 (2); Bodies Corporate (Official Liquidation) Act, op cit, s. 17.

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iii.Stay of Winding up Proceedings

Upon the making of a winding up order, the Federal High Court on the application of a Liquidator or the Official Receiver, or any Creditor or Contributory, may make an order staying the proceedings either all together or for a limited time, on such terms and conditions as the court thinks fit.⁴⁸¹ Instructively, it should be noted that a copy of every order of stay made after the winding up order shall be forwarded to the Corporate Affairs Commission which shall enter it in its records relating to the company.⁴⁸² As earlier discussed in this chapter, an order for stay of proceedings is not granted as a matter of course.

iv.Submission of Statement of Company‟s Affairs to Official Receiver

Where the court has made a winding up order and unless the court thinks fit to order otherwise, a statement as to the affairs of the company in the prescribed form, verified by affidavit by one or more of the persons who are the directors of the company, the secretary, or such other persons as the official receiver may direct, is to be submitted to the official receiver within 14 days of the winding up order.⁴⁸³ The requirement to submit statement of affairs may be dispensed with under certain special circumstances.⁴⁸⁴

v.Settlement of List of Contributories and Application of Assets; Making of Calls:

It is after the making of a winding up order that the court shall settle a list of contributories and may rectify the register of members in all cases where rectification

481 CAMA, op cit, s. 438 (1) (2); Insolvency Act, op cit, s. 147 (1); CWR, op cit, r. 32 (1).

482 CAMA, ibid, s. 438 (4); Insolvency Act, ibid, s. 147 (3).

483 CAMA, ibid, s. 420 (1) (2) (3) (8); Insolvency Act, ibid, s. 131(1) (2) (3) (4) (6) (UK) – in this case, the period within which the statement of affairs is to be submitted to the official Receiver is 21 days;

Bodies Corporate (Official Liquidation) Act, op cit, s. 19 – in the Republic of Ghana, the statement of affairs is submitted to the liquidator, who is the Registrar of Companies; CWR, op cit, rr. 35 – 40;

Insolvency Rules, op cit, chapter 6.

484 CWR, ibid, r. 40; Insolvency Rules, ibid, r. 4.46.

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is required and cause the assets of the company to be collected and applied in discharge of its liabilities.⁴⁸⁵ The court may dispense with the settlement of a list of contributories where it appears not necessary to make calls on or adjust the right of contributories.⁴⁸⁶ This power vested in the court to settle a list of contributories, in practice, is exercised by the liquidator as an officer of the court.⁴⁸⁷

Furthermore, the making of a winding up order empowers the court to make calls on all or any of the contributories for the time being settled on the list of contributories to the extent of their liability, for payment of any money which the court considers necessary to satisfy the debts and liabilities of the company and the cost, charges and expenses of the winding up proceedings.⁴⁸⁸ This power vested in the court to make calls on contributories, in practice, is exercised by the liquidator as an officer of the court.⁴⁸⁹

vi.Collective Regime

The making of a winding up order activates the notion of collectivity in insolvency proceedings. In other words, the effects of a winding up order does not inure on the petitioner alone but operates in favour of all the creditors and of all the contributories of the company as if made on the joint petition of a creditor and of a contributory.⁴⁹⁰ Hence, the making of a winding up order imposes a collective regime involving the abatement of all claims of creditors, who are ranked equally under the pari passu rule who now share in the distribution under the winding up proceedings.

485 CAMA, op cit, s. 439 (1); Insolvency Act, op cit, s. 148 (1); Bodies Corporate (Official Liquidation) Act, op cit, s. 20 (1) – in the Republic of Ghana, it is the liquidator that settles the list of contributories.

486 CAMA, ibid, 439 (2); Insolvency Act, ibid, s. 148 (2); Bodies Corporate (Official Liquidation) Act, ibid, s. 20 (2).

487 CWR, op cit, rr. 63 – 66.

488 CAMA, op cit, s. 442 (1); Insolvency Act, op cit, s. 150 (1).

489 CWR, op cit, rr. 69 – 73.

490 CAMA, op cit, s. 418; Insolvency Act, op cit, s.130 (4).

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vii.Appointment of Liquidator

It is upon the making of a winding up order by the court that a liquidator would be appointed for the purpose of conducting the proceedings in winding up a company and performing such duties as the court may impose.⁴⁹¹ Where no liquidator is appointed or there is a vacancy, the official receiver shall by virtue of his office become the liquidator or act as liquidator until such time as the vacancy is filled.⁴⁹²

viii.Delivery of Property to Liquidator

On the making of a winding up order, the court may require any contributory for the time being on the list of contributories and any trustee, receiver, banker, agent or officer of the company, to pay, deliver, convey, surrender or transfer immediately or within such time as given by the court, to the liquidator, any money, property or books in his hands to which the company is prima facie entitled.⁴⁹³

ix.Contract of Employment

The making of a winding up order constitutes a ground for the termination by operation of law of a contract of employment.⁴⁹⁴ However, in the case of voluntary winding up, the employee may still be entitled to damages.⁴⁹⁵ In this study, it is respectfully submitted that winding up order made by a court does not automatically terminate existing contracts of employment but rather constitute an implied notice to the employees of the close determination of their employment.⁴⁹⁶