Creditors' voluntary winding up If the company is not able to meet its liabilities, the company can convene a meeting with its creditors to consider its proposal for a voluntary winding up of the company.
For example, sale of assets at full market value may also be validated if the transaction does not involve dissipation of the company's assets.
A disposition or sale carried out in good faith in the ordinary course of business at a time when parties are unaware that a winding up application has been presented may be validated by the Court unless there were grounds for thinking that the transaction might involve an attempt to prefer the buyer.
Reasons for winding up a company Members' voluntary winding up The company’s contributories (also known as members or shareholders) may pass a resolution that the company be wound up and that a liquidator be appointed.
The liquidation commences at the time of passing the resolution.
d) Floating charges A floating charge created within 6 months of the commencement of the winding up shall be invalid, except to the amount of cash paid to the company at the time of or subsequently to the creation of the charge, together with the interest at 5% per annum.
The floating charge shall remain invalid unless the secured creditor is able to prove that the company was solvent after the creation of the floating charge.
The common grounds for a company to be wound up by the Court include: The company is deemed unable to pay its debts under section 254(2)(a) of the Companies Act (Cap.
50) if a company's creditor, who is owed more than S,000, has served a demand for the sum owing at the registered office of the company, and the company has not paid this sum for three weeks thereafter.
e) Secured creditors The rights of the secured creditor to deal or realise security over company assets are not affected by the winding up order.