Effects of liquidation on the liquidating corporation
It is adopted where the company is able to pay its debts in full within 12 months after the commencement of winding up.
The directors of the Company are required to file a declaration of solvency.
It must be noted that the liquidator shall not be liable to incur any expenses in relation to a winding up unless there are sufficient available assets.
A creditors' meeting may be convened for the purpose of obtaining the creditors' consent to pursue a claim that is worth pursuing and to meet the expenses of pursuing such a claim.
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.
The Court may allow the disposal of property for continuation of business or in the ordinary course of business, which may be beneficial not only to the company but also to the unsecured creditors.c) Execution proceedings After a winding up application has been presented, no creditor is allowed to take out or continue attachment or execution proceedings against the company.A creditor must complete execution before the winding up application has been presented. For example, goods under a writ of seizure and sale must be seized and sold; garnishee proceedings are completed on receipt of the debt.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.However the secured creditor is not entitled to interest on the debt if the security is not realised within 12 months of winding up or such further period as allowed by the Official Receiver.