Legal Action against Company in Liquidation

Whether it has standing depends on the applicable insolvency regime. All appointments of receivers are announced in The Gazette and Companies House. English and Welsh insolvency dates will appear in the London Gazette, Scottish appointments in the Edinburgh Gazette and Northern Ireland in the Belfast Gazette. Non-registration of the certificate of incorporation does not deprive the company of its legal personality. Until actual registration, a business can operate even if it is in an irregular situation. However, there are certain legal steps that a liquidation can only initiate in one`s own name. These include void decisions (Article 182 CO) and unfair preferential treatment (§ 266 CO). These actions must be brought personally by the insolvency practitioner, so that he must bear the effects of an adverse costs order, although he retains the right to compensation on the assets of the company. If you think you have grounds to make a claim against a business, but then find out that it has been wound up, one of the questions you may be asking yourself is, “Can you sue a business in voluntary liquidation?” The very short answer to this question is yes, you can. However, there are many hurdles to overcome when a business enters voluntary liquidation that can make it difficult to hear and process your claim. As a result, it is often not a commercially rewarding profession. In Scotland, the court has the express power to order, on the application of the liquidator, that no action or proceeding may be brought or continued against a company in voluntary liquidation without leave of the court.

When a company enters a voluntary liquidation of members (MVL) or a voluntary liquidation of creditors (CVL), all its assets are placed under the control of a liquidator or designated creditor. While there is no automatic restriction against the company`s claim during this process, if the company is protected by a judicial stay, it can make things very difficult. Let`s say you`re a waiter in a restaurant. They come to work one night and find that the doors are locked. You call your manager to find out what`s going on, and your boss tells you that the business has closed, the business has been dissolved, and he has no idea where the owners left. You`re wondering how you`re going to get your last paycheck. That is, when you receive your cheque. Jane Henderson is considering curbing lawsuits by creditors against insolvent companies. If a company is in receivership in the UK, a statutory moratorium automatically applies and no legal proceedings can be brought or continued against the company without the consent of the director or the permission of the court.

In the most recent case, The Joint and Various Liquidators of QQ Club Limited (in liquidation) v Golden Year Limited (HCCW 245/2011), the liquidators initially feared that, following the British case Lewis v. IRC Re Lewis v. IRC [2001], the Hong Kong court considers that an unfair preferential claim at the beginning of the liquidation is not an “asset” of the company and that they may therefore not be able to: all costs, including their own legal fees. The legal moratorium on administration and compulsory liquidation prevents one creditor from taking precedence over others. Since IPs will decide on claims and some issues will otherwise be dealt with during insolvency proceedings, the moratorium can also avoid potentially costly and unnecessary litigation. In addition, an insolvency practitioner has a duty to realize the assets of the insolvent company at the best possible price in order to maximize the amount available to the company`s creditors. [22] In addition to the personal incapacity of the liquidator and/or the personal misconduct of the liquidator, liquidators may be replaced if the court is satisfied, on the basis of the evidence, that it is in the best interests of the liquidation that the liquidator should be replaced. [23] However, the Hong Kong court considers that Hong Kong`s legal framework differs from the English framework and held in QQ Club that the fees and expenses of liquidators in successfully pursuing an unfair preferential treatment claim fell within the first paragraph of Rule 179 of the Companies (Liquiding-up) Rules (“CWUR”).

This means that they are higher than the costs of the official receiver and those of the applicant. It is therefore perfectly legal and justified to take legal action against the company. A claim that does not require the initiation or request for cancellation of the registration of the forfeiture. Dissolving a company is easier said than done. If you believe you have been wronged by a company and discover that it has since dissolved, you should consult a business lawyer as soon as possible. You may still have time, according to state law, to pursue it. If an insolvency practitioner litigates on behalf of the company, he or she risks costs awards against the company, which would prevail over his remuneration and the fees of his legal counsel. In these actions, the liquidators must ensure that they are not appointed as a party to the action and, if they are, ensure that they are appointed as representatives of the company. However, the insolvency practitioner must also pay attention to a decision on costs made by a third party, which may have been made against the insolvency practitioner personally if his or her conduct was inappropriate or if he or she did not exercise reasonable diligence and expertise.

Typically, the voluntary dissolution process involves seven steps for a company with a “good reputation.” To shed some light on the topic “Can you sue a company in voluntary liquidation,” let`s take a closer look at how the process works. Similarly, in the event that unfulfilled liabilities arise after termination, a liability action may be brought against the shareholders. The liability is limited to the respective liquidation rates achieved by each of them. The recent Supreme Court decision is based on the premise that a company does not lose its legal personality until all its commercial and legal relations have ceased. This means that any insolvency administrator who brings an action in its own name may be personally liable for adverse costs if the action is unsuccessful. In these circumstances, it would be desirable for an insolvency practitioner to ensure that he receives effective remuneration from the assets of the company or possibly from a third party. “The insolvency practitioner had voluntarily agreed to take over the implementation of the liquidation proceedings for remuneration and, therefore, was expected to act professionally with a view to a fair, expeditious and cost-effective sale of the liquidation proceedings. Therefore, a liquidator has a fiduciary duty on creditors and contributors to act impartially, independently and transparently in the performance of their duties. [17] In addition, as an officer of the court, a liquidator is also required to comply with court orders and directions,[18] and otherwise it is nothing less than contempt[19] and may also lead to a professional negligence claim against the liquidator to compensate for all losses and damages resulting from his or her misconduct.

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