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OUTER HOUSE, COURT OF SESSION
[2008] CSOH 56
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P669/06
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OPINION OF LORD GLENNIE
in the Note by
JOHN CHARLES REID and JAMES BERNARD STEPHEN, both of
Deloitte & Touche LLP, Lomond House, 9 George Square, Glasgow, the
Joint liquidators of Arakin Limited (SC061475)
Noters;
for
Audit of their intromissions with the Company's estate,
for approval of their accounts, for discharge from liability as regards their
conduct in the liquidation, and to sist the winding up.
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Noters: Cormack; McGrigors
Respondents: personally present
28 March 2008
[1] On 14 October 2004 the court ordered
that Arakin Limited ("the Company") be wound up on the ground that it was
unable to pay its debts: s.122(1)(f) Insolvency Act 1986 ("the Act"). That inability was proved in terms of
s.123(1)(c) of the Act. John Charles
Reid and James Bernard Stephen, both of Deloitte & Touche LLP, were
appointed interim liquidators and, at a meeting of creditors on 7 December 2004, were appointed liquidators
of the Company. I shall refer to them as
"the Joint Liquidators".
[2] The
liquidation has been long drawn out and highly contentious. It would not be helpful at this stage to
apportion blame for that and in any event I have not heard full submissions on
that issue. The important thing is to
look forward. By Note lodged in process
on 6 April 2006 (No.37 of
Process) the Joint Liquidators, referred to in the Note as "the noters", seek
to bring the liquidation to an end. They
ask the court to fix their outlays and remuneration as interim liquidators and
liquidators for the period 14 October 2004 to 28 February 2006 and to discharge
them from liability for their acts and omissions in the winding up; and, for
this purpose, to remit those matters to the Auditor of Court and to a Reporter
in terms of s.53 of the Bankruptcy (Scotland) Act 1985 as applied with
modifications by Rule 4.68 of the Insolvency (Scotland) Rules 1986 and to waive
their non-compliance with the provisions thereof relating to their timeous submission
of their accounts of their intromissions and their claims for outlays and
remuneration. They go on to ask the
court to sist the winding up of the company, but only from the date when the
court shall have (a) approved the reports of the Reporter and the Auditor of
Court concerning their outlays and remuneration as interim liquidators and
liquidators and (b) discharged them from all liability both in respect of their
acts and omissions in the winding up and otherwise in relation to their conduct
as interim liquidators and liquidators.
[3] In
para.2 of the Note the Joint Liquidators say this:
"That by this application,
having completed the winding up process insofar as it requires the payment to
eligible creditors of the Company as at the date of the commencement of the
winding up, the [Joint Liquidators] seek to have their outlays and remuneration
as interim liquidators and liquidators of the Company fixed and to seek the
order of Your Lordships in relation to the termination of the liquidation and
to obtain their release."
The proposal for termination of the liquidation is by
way of a sist under s.147 of the Insolvency Act 1986. The reason for this is explained in the
Note. In para.43, having set out much of
the procedural history of the winding up, the Joint Liquidators point out that
their obligation in terms of s.143 of the Act is to realize the assets of the
Company and distribute the surplus to the persons entitled to it. At the date of the Note the person entitled
to the surplus was West Corporation, which was then the Company's sole shareholder;
but it is accepted, as I understand it, that Mr and Mrs McNamara are now the
only shareholders in the Company. The
Joint Liquidators go on to say that should they distribute the surplus in this
way there might be a significant tax liability for the shareholder(s). Other options might trigger a significant tax
liability for the Company. In those
circumstances they submit that the court should sist the winding up "and return
the company to its shareholders", a course which is likely to incur the least
tax consequences for the Company and the shareholders. However, the Joint Liquidators go on to
submit that if the winding up is to be sisted for this reason, the disposal of
the other matters raised in the Note (viz.
fixing their outlays and remuneration and granting a release from liabilities)
should be no different from that which would have obtained had one or other of
the alternative routes been followed. In
other words, they say that their outlays and remuneration should be fixed and
their release be granted before the winding up proceedings are sisted.
[4] Answers
to the Note (No.94 of Process) were lodged by Mr and Mrs McNamara as
shareholders.. In their Answers they take
issue with many of the statements made in the Note. It is unnecessary at this stage to go into
these disputes. It is, however,
important to note that at paras.40, 44, 46 and 67, they support the proposal
that the winding up be sisted and the Company be returned to its shareholders;
but they contend that the fixing of the Joint Liquidators' outlays and
remuneration and the question of their release should be dealt with
subsequently. They suggest that security
be put up to cover the Joint Liquidators' remuneration when ascertained.
[5] In
their Answers, Mr and Mrs McNamara make it clear that they wish to
challenge the outlays and remuneration claimed by the Joint Liquidators. They also wish to contend that the Joint
Liquidators should not be released from liability for their acts and omissions
whilst in office and raise certain specific matters of complaint. Further, Mr McNamara contends that he is
a creditor of the Company in the sum of г48,869, a claim which has been
rejected by the Joint Liquidators. In
consequence, the liquidation has thrown up a number of satellite actions,
including the following:
(a) a Note by Mr McNamara (No.137 of
Process) seeking to appeal the Joint Liquidators' rejection of his claim to be
a creditor in the said amount. I shall
refer to this as "the creditor appeal".
As well as defending this Note on its merits, the Joint Liquidators
challenge the competency of the Note for procedural reasons. Part at least of the relevance of this Note
is the "creditor" status it might confer on Mr McNamara, if successful,
for the purpose of the ss.155 and 212 applications to which I refer below;
though the Joint Liquidators say that if it is held that Mr McNamara is a
creditor in that amount then they will pay him that amount and he will
thereupon cease to be a creditor of the Company.
(b) A Note (No.122 of Process) by Mr and Mrs McNamara,
as shareholders, seeking an Order in terms of s.155 of the Act allowing
inspection of the Company's books. I
shall refer to this as "the s.155 application".
This is designed, as I understand it, to enable Mr and Mrs McNamara
to uncover evidence to support their opposition to a release being granted to
the Joint Liquidators and/or to support an application to be made by them under
s.212 of the Act in respect of the actions of the Joint Liquidators whilst in
office. As I understand it, the
competency of this application, in particular the question of Mr and Mrs McNamara's
locus to make such an application
under s.155 is in dispute. Similar
objections will, no doubt, be made in respect of Mr and Mrs McNamara's locus to proceed under s.212.
A hearing on the creditor appeal has been fixed for early
in June of this year. A hearing on the
competency of the s.155 application has been fixed to come on before Lord
Menzies late in May. Whatever the
outcome of those applications, it can safely be assumed that further disputes,
whether related or not, will arise and will themselves lead to further
applications to the court by Note, no doubt with further preliminary objections
as to competency and locus. Little progress has been made in respect of
the various applications in the Joint Liquidators' Note (No.37 of Process) and
a substantive hearing on the Note is still a long way off. The likelihood is that the liquidation
proceedings will continue to be protracted and contentious.
[6] It
was against this background that I fixed a hearing By Order on 12 and 26 March
on all three matters, that is to say (i) the Joint Liquidators' Note (No. 37 of
Process), (ii) the creditor appeal (No.137 of Process) and (iii) the s.155
application (No.122 of Process), with a view to seeing whether there could be
found a more sensible and cost effective method of resolving the outstanding
disputes between the parties.
[7] The
Joint Liquidators' application to sist the winding up is made in terms of
s.147(1) of the Act. This provides as
follows:
"Power to stay or sist
winding up.
(1) The court may at any
time after an order for winding up, on the application either of the liquidator
or the official receiver or any creditor or contributory, and on proof to the
satisfaction of the court that all proceedings in the winding up ought to be
stayed or sisted, make an order staying or sisting the proceedings, either
altogether or for a limited time, on such terms and conditions as the court
thinks fit."
The discretion conferred by s.147 has been considered
in a number of cases. At the first By
Order hearing I was referred in particular to the decision of Megarry J in In re Calgary and Edmonton Land Co. Ltd. (in
liquidation) [1975] 1 WLR 355. After
the second hearing the Joint Liquidators also brought to my attention the
decision of the Inner House in McGruther
v James Scott Ltd. 2004 SC 514, though they made no additional
submissions. I shall refer in more detail
to these cases in due course.
[8] As I
have said, both the Joint Liquidators and Mr and Mrs McNamara wish the
winding up to be sisted. This is
obviously the sensible course. The
Company is highly solvent. I was told by
Mr Cormack, who appeared for the Joint Liquidators, that the net assets of
the Company run into several millions of pounds. The precise figure does not matter. With the exception of Mr McNamara's
disputed claim to be a creditor of the company, all the creditors at the time
of the winding up order have been paid off.
For the reasons given by the Joint Liquidators in their Note, which I
have summarized in para.[3] above, I am satisfied that the appropriate course
at the end of the liquidation is to sist the winding up and return the Company
to its shareholders. The question is one
of timing. There is nothing further for
the Joint Liquidators to do in the liquidation.
The only outstanding matters are those raised in the Joint Liquidators' Note
(No.37 of Process), namely their application to have their outlays and
remuneration fixed and to be discharged from liability as regards their conduct
in the liquidation. The dispute between
the parties is as to whether the winding up should be sisted whilst these
matters are still outstanding or whether, as the Joint Liquidators prefer, the
sist should only come into effect after all these matters have been resolved.
[9] The
position of the Joint Liquidators, as explained by Mr Cormack, was in
summary as follows. Because of their
status as officers of the court, they were in the court's hands as regards the
proper course to be taken. On balance,
they submitted, it was more appropriate to allow the liquidation to continue in
the usual way until these outstanding matters were resolved. Although it was recognised that sisting the
liquidation at this stage might have the advantage of making redundant certain
of the outstanding disputes - e.g. the creditor appeal and the s.155
application - it was unlikely to shorten the dispute and might in fact introduce
further grounds for dispute. For
example, there might be difficulties put in the way of realising any security
put in place to protect the Joint Liquidators' position. The history of the matter to date did not
encourage optimism on that score. Further,
the continued existence of the liquidation, coupled with the obvious desire on
the part of the McNamaras to get the Company back, might provide an impetus to
the speedy resolution of the outstanding matters. The Joint Liquidators accepted appointment on
the basis that the liquidation would follow the usual course. They should not be left unprotected. If there were a sist, whether total or
partial, it would require careful drafting to ensure that the Joint Liquidators
were not left exposed to continuing liabilities.
[10] In Re Calgary and
Edmonton Land Co. Ltd. (in liquidation), Megarry J pointed out that that
the language of the section made it clear that the jurisdiction to sist a
winding up is discretionary and that it lies on those who seek a sist to make
out a sufficient case for it. I was
referred to a passage beginning at p.360B where Megarry J considered the
persons whose interests ought normally to be considered in making the decision
whether or not to sist the winding up.
He said this:
"That brings me
to the third point, that of the persons whose interests have to be considered
on an application for a stay. These
must, of course, depend on the circumstances of each case; but where, as here,
there is a strong probability, if not more, that the assets of the company will
suffice to pay all the creditors and the expenses of the liquidation, and so
leave a surplus for the members of the company, there are plainly three
categories to consider. First, there are
the creditors. Their rights are finite,
in that they cannot claim more than 100p in the pound. I cannot see that in
normal circumstances any objection to a stay could be made on behalf of the
creditors if for each of them it is established either that he has been paid in
full, or that satisfactory provision for him to be paid in full has been or
will be made, or else that he consents to the stay or is otherwise bound not to
object to it. Second, there is the
liquidator. By section 309, all costs, charges and expenses properly
incurred in the winding up, including the liquidator's remuneration, are made
payable out of the assets of the company in priority to all other claims. Where a liquidator has accepted office on this
footing, I cannot see that in normal circumstances it would be right to stay
the winding up unless his special position had been fully safeguarded, either
by paying him the proper amount for his expenses or by sufficiently securing
payment. A liquidator who loses control
of the assets by reason of a stay ought normally to be properly safeguarded in
relation to his expenses. Third, there
are the members of the company. No
question of satisfying them by immediate payment of all that they are entitled
to can very well arise; for unlike the creditors, with their ascertained or
ascertainable debts, the rights of the members cannot be quantified until the
liquidation is complete. Accordingly, in
normal circumstances I think that no stay should be granted unless each member
either consents to it, or is otherwise bound not to object to it, or else there
is secured to him the right to receive all that he would have received had the
winding up proceeded to its conclusion. Each
member has a right of a proprietary nature to share in the surplus assets, and
each should be protected against the destruction of that right without good
cause.
It will be
observed that each of the heads is qualified by the words 'in normal
circumstances.' I am not suggesting that
in these cases there are hard and fast rules; but I am saying that the circumstances
that I have mentioned will usually be at least highly material in deciding how
the court's discretion should be exercised. Cases out of the normal way, of course, call
for special treatment."
The principles upon which the discretion might
properly be exercised were recently considered by the Inner House in McGruther v James Scott Ltd. Lord Hamilton, giving the Opinion of the
Court, said this at paras.[16]-[18]:
"[16] It
is clear from the terms of sec 147(1) that the applicant for a sist, if he
is to succeed, must satisfy the court that such an order ought to be made. We do not construe Megarry J's
observation in Re Calgary & Edmonton Land Co Ltd (at pp 358, 359) that 'the applicant for a
stay must make out a case that carries conviction' as intended to impose any
special burden on the applicant. ... The
ordinary burden of satisfying the judge, whether on evidence or other material,
rests on the applicant. We are unable to
accept the soundness of any textbook glosses which may suggest otherwise.
[17] In
addressing the issue whether or not the power should be exercised, the judge
requires to consider the rights and interests of those who may be affected by
his or her decision. Depending on the
circumstances, such persons may include the creditors, the liquidator and the
members (Re Calgary & Edmonton Land Co Ltd, per Megarry J at p
360). The public interest may also
require to be considered (as in Re Telescriptor Syndicate Ltd). Other particular persons may have an interest
which likewise has to be addressed. ...
[18] Megarry J
indicated that in cases of this kind there are no 'hard and fast rules'. It is clear that he regarded none of the
categories of persons whose interests he identified as having a right in all
circumstances to full protection of his prior position. What is reasonable protection for any person
with an interest must depend on the nature of that interest, the nature of any
other interests and the whole other circumstances of the particular case."
Submissions were made to me by reference to the
categories identified by Megarry J in the passage which I have cited. Whilst recognising that other persons might
require to be considered depending on the circumstances, it was not suggested
that in this case I need look beyond those categories.
[11] As I
have said, I am persuaded that a sist of the winding up under s.147 of the Act
is the appropriate course at some stage.
All parties are in agreement on this.
But I must still consider the interests of parties who might be affected
by the stage at which the sist is granted.
[12] The
first category identified by Megarry J is the body of creditors. In the present case I am told that all
creditors have been paid off. The only
uncertainty hangs over Mr McNamara and his claim to be a creditor to the
extent of г48,869. Mr McNamara
wants the Company to be returned to himself and his wife as the sole
shareholders. If that is to be done, he
has no interest in establishing a claim against the Company. He has indicated his consent to the winding up
being sisted without the creditor appeal being decided on its merits. It is agreed that if an order is made sisting
the winding up, the creditor appeal should be brought to an end, preferably, so
it seems to me, by it also being sisted, that being the most neutral form of
disposal. By the same token, since Mr
and Mrs McNamara are the only shareholders and they consent to the winding
up being sisted, no separate consideration need be given to the members of the
Company. That leaves the Joint
Liquidators. I repeat, because Mr Cormack
emphasised this point, the words of Megarry J dealing with their position. He identified the basic rule, in Scotland now
dealt with in the Insolvency (Scotland) Rules 1986, as being that all costs,
charges and expenses properly incurred in the winding up, including the
liquidator's remuneration, are made payable out of the assets of the company in
priority to all other claims. He went on
to say:
"Where a liquidator has
accepted office on this footing, I cannot see that in normal circumstances it
would be right to stay the winding up unless his special position had been
fully safeguarded, either by paying him the proper amount for his expenses or
by sufficiently securing payment. A
liquidator who loses control of the assets by reason of a stay ought normally
to be properly safeguarded in relation to his expenses."
It seems to me that this has great force in a case
such as the present. In the ordinary
course, as Megarry J points out, the liquidators' outlays and remuneration
would be paid out of the assets of the company in priority to other
claims. It is not suggested that they
should have less security if the winding up is to be sisted before these
matters have been dealt with. If it is
sisted now, there is no question of the Joint Liquidators being paid their
outlays or remuneration before the sist comes into force. They have not as yet submitted their claims
in accordance with s.53 of the Bankruptcy (Scotland)
Act 1985, as applied with modifications by the Insolvency (Scotland)
Rules 1986. Therefore security must be
given for payment of such outlays and remuneration as may be fixed in the
future. Security must also be given for
future expenses which may be incurred by the Joint Liquidators in resisting
challenges to their remuneration and/or to their claim to be released from
liability for their conduct of the liquidation.
I was told that the Joint Liquidators estimate that their fees and
outlays to date amount to a figure of about г470,000. That will, of course, be subject to audit by
the Auditor of Court and the Reporter appointed by the court and ultimately to
the court's approval. I should not limit
the security to this sum however.
Further expenses may be incurred in establishing the level of their
remuneration, in seeking to establish their entitlement to a discharge and,
possibly, in realising the security. On
the basis that remuneration and outlays to date are estimated at nearly
г500,000, I would be minded, having regard to these other matters, to double
that and order that security be put up in the amount of г1,000,000. This sum amply covers the liquidators for
their current estimates of outlays and remuneration and provides ample margin
for all circumstances that may occur between now and the final resolution of
all outstanding issues, even if one were to assume the worst. This sum was agreed in court to be an
appropriate sum; and it was further agreed that, if I were to order a sist on
this basis, security should be put up in equal parts by a cash deposit in an
interest bearing account and by a heritable security over one of the Company's
properties, namely that at 1305 Shettleston Road, Glasgow. To avoid any risk to the Joint Liquidators of
the company's assets being put beyond their reach after the sist and before the
security is established, the interlocutor to be pronounced would require the
Joint Liquidators to effect such security themselves; and would go on to
provide for the sist only to be ordered once the security is in place.
[13] At the
end of the last hearing, Mr Cormack indicated that he wished to take
instructions on certain matters which might, in the opinion of the Joint
Liquidators, expose them to the possibility of being held liable for the
liabilities of the Company. This was, as
I understood it, on the basis that what was proposed was a partial sist, but I
will listen to anything he may bring to my attention on this topic. Subject to this, however, it seems to me that
by the provision of security in the manner indicated, the Joint Liquidators
have ample security for their claims to remuneration and outlays, present and
future, and for any further legal and other expenses which they may incur. On that basis, I see no advantage in
prolonging the winding up and every advantage in sisting it. If it is sisted now, the satellite litigation
presently on foot will come to an end.
There will be no purpose in the creditor appeal continuing, and that can
be sisted. The s.155 application becomes
unnecessary - as directors of the Company, Mr and Mrs McNamara will have
full access to the Company's books - and can also be sisted. There will be no need for Mr and Mrs McNamara
to consider making an application under s.212 of the Act, since their rights
(if any) under that section are no greater than their rights as shareholders
and directors of the Company to oppose the application by the Joint Liquidators
for a release from liabilities. I put
this in this way advisedly. I have not
had to consider what rights, if any, a shareholder or director of a solvent
company emerging from a liquidation may have to challenge the Joint
Liquidators' application for a release from liability. But I cannot conceive that their rights, if
any, under s.212 of the Act would put such a person in a more advantageous
position. After all, an application
under s.212 can only be made by a restricted class of persons and, in the case
of a contributory, only with the leave of the court. On this basis, if I were to sist the winding
up now, there would be no reason for further satellite litigation. The matter would proceed to the submission by
the Joint Liquidators of their accounts of intromissions and their claims for
outlays and remuneration in terms of s.53 of the Bankruptcy (Scotland)
Act 1985 as applied to insolvency by the Insolvency (Scotland)
Rules 1986. Any opposition to their
claims would be dealt with within that process.
I should add that I do not attach any weight to the submission, made on
behalf of the Joint Liquidators, that if the liquidation continued it might
provide some "impetus" to a resolution of the outstanding disputes. It is true that it might give the Joint
Liquidators a tactical advantage enabling them to bring some pressure to bear
on Mr and Mrs McNamara to back off, though the history of the matter to date
does not suggest that that is likely to be effective. But it is not the function of the court to
choose a course so as to give one side or the other such an advantage and I
therefore disregard it altogether.
[14] A
question remains as to the form of the sist: should it be partial or total? At the end of the first By Order hearing I
circulated a draft Interlocutor which provided that the winding up should be
sisted "save for" certain purposes, those purposes being the Joint Liquidators'
applications to have their outlays and remuneration fixed and to obtain their
release from liability. In light of this
suggestion, Mr Cormack drew to my attention certain authorities and
passages in text books dealing with the competency of a partial sist. He accepted that it was competent for the
court to order a partial sist, i.e. to sist the winding up for some purpose
though not for others. Authority for
this is to be found in Re Western of
Canada Oil, Lands and Works Company [1874] WN 148; and both Buckley on the Companies Acts, 14th
Ed. at para.256 and Gore-Browne on
Companies (Update 62) at para.56[10] support the proposition that a sist
can be partial, the winding up being allowed to continue for certain limited
purposes. There is a suggestion to the
contrary in the earlier authority of Re
European Assurance Company [1872] WN 85, but the circumstances in that case
were somewhat peculiar. I prefer the
authority of Re Western of Canada Oil,
Lands and Works Company and the text books to which I have referred. In my opinion a partial sist of a winding up
is competent under s.147 of the Act.
However, it will usually be cleaner and apt to cause less confusion if a
sist ordered under that section is total.
I would therefore be reluctant to order a partial sist in circumstances
where there was no need for the liquidators to continue in office for the
purpose of resolving any outstanding issues.
In Re Western of Canada Oil, Lands
and Works Company it was necessary for the liquidators to stay in office
for the purpose of considering whether or not to raise proceedings and for the
purpose of realizing the assets of the company with certain exceptions. In the present case I see no reason why the
liquidation need continue or the Joint Liquidators remain in office in order
for the applications relating to outlays and remuneration and discharge to be
disposed of. Mr Cormack accepted,
by reference to s.174 of the Act, that the question of release from liability
could competently be dealt with after the Joint Liquidators had demitted
office. He put before me no persuasive
argument to the effect that they needed to remain in office while questions
relating to their remuneration and outlays were resolved. In Re Calgary & Edmonton Land Co Ltd the discussion in the
judgment proceeds on the basis that if a stay were ordered security would have
to be given for the remuneration of the liquidator, presumably on the basis
that the amount due to him would not be fixed until after the liquidation was
sisted. The drafting of the
interlocutor and the security documentation is, of course, crucial, but there
is no reason why the drafting should not provide a solution to any such
difficulties and also include provision for securing, within the total amount
of г1,000,000, the further expenses etc. which the Joint Liquidators may incur
in defending themselves against the possible challenges to which they may be
subject.
[15] For
these reasons I am persuaded (subject to any new points that may be put forward
at the By Order hearing fixed for 2 April) that a sist of the winding up
is appropriate; that the winding up should be sisted as soon as the security is
in place; and that the sist should be total, not partial, on the basis that the
interlocutor will provide for the progress of the Joint Liquidators'
applications for payment and release.
[16] I
propose also in the interlocutor to give directions for the remaining
applications made in the Joint Liquidators' Note (No.37 of Process). Subject to further argument, it seems to me
that the Joint Liquidators should be required to submit their accounts of their
intromissions and their claims for outlays and remuneration within three
months. The incorporation into the
Insolvency (Scotland)
Rules 1986 of s.53 of the Bankruptcy (Scotland)
Act 1985, with a requirement for such accounts and claims to be lodged and
audited every six months is unsatisfactory, and invariably gives rise to
applications by liquidators for the court to waive non-compliance. The practice of the court in recent years has
been to consider the question of waiver in advance of allowing a remit to the
Auditor of Court and the Reporter, but some have suggested that the court is in
a better position to decide whether non-compliance should be waived once it has
received the Auditor's and the Reporter's reports. I do not think that it is necessary to lay
down a hard and fast rule about this.
What is important is that at the time it is required to make a decision
the court should be in possession of sufficient information to make that
decision. In the present case it seems
to me that I should defer a consideration of the question of waiver until I
have seen the reports from the Auditor and the Reporter. Once those reports are to hand, the Joint
Liquidators will require to enrol a motion to have their outlays and
remuneration fixed, for their non-compliance to be waived and for them to be
released from liability in respect of their acts and omissions during the
liquidation. I will require that motion
to be served on Mr and Mrs McNamara. Any
arguments as to whether they have a right to be heard in opposition can be
dealt with at that stage.
[17] I have
put the case out for a hearing By Order next Wednesday 2 April. I would hope that the final arrangements
could then be put in place. I attach to
this Opinion a revised draft interlocutor dealing with the matters discussed in
this Opinion. The draft is open for
discussion. I would hope to be able to
finalise matters at the By Order hearing.
I shall at the same time issue separate interlocutors sisting the
creditor appeal and the s.155 application and discharging the diets currently
fixed in those cases.
APPENDIX
Revised draft Interlocutor:
The Lord Ordinary, having again heard Counsel for the Joint
Liquidators and the Respondents personally By Order, and of consent, Mr.
McNamara having also consented in his capacity as an alleged creditor of the
Company, and with a view to sisting the winding up of the Company in terms of
Section 147(1) of the Insolvency Act 1986 once the security referred to in
paragraph 9 of this interlocutor has been put in place:
(1) Permits the Joint Liquidators to proceed (i) with their
application to have their outlays and remuneration as interim liquidators and
liquidators of the Company fixed and (ii) with their application to obtain
their release and to be discharged from all liability both in respect of acts
or omissions of theirs in the winding up and otherwise in relation to their
conduct as interim and joint liquidators;
(2) Appoints the Joint Liquidators to submit an account of
their intromissions with the assets of the Company and their claim for outlays
and remuneration as interim liquidators and liquidators of the Company by [2
July 2008];
(3) Remits to Colin A. F. Hastings, Chartered Accountant, Messrs.
Hastings & Co.,13
Bath Street, Glasgow, to
examine and audit the account of the Noter's intromissions as interim and official liquidators for the
period from 14 October 2004 to date, in so far as not already approved by the
liquidation committee, and to report thereon, to suggest a suitable sum for
outlays and report what in his opinion is a suitable remuneration for the interim and official liquidators for the
said period;
(4) Remits to the Auditor of Court to report what in his
opinion is a suitable sum for outlays and remuneration for the interim and official liquidators for the
said period;
(5) Appoints the said reporter and the Auditor of Court to
confer before issuing their respective reports;
(6) Remits to the Auditor of Court to tax the Noters' Law
agents' Account of expenses.
(7) Appoints the Joint Liquidators to serve any motion for
approval of their outlays and remuneration and for their release and discharge
upon the Respondents;
(8) Defers until the hearing of such motion consideration of
the various applications by the Joint Liquidators in their Note No.37 of
Process for waiver of their non-compliance with the provisions of s.53 of the
Bankruptcy (Scotland) Act 1985 and the Insolvency (Scotland) Rules 1986;
(9) Appoints the Joint Liquidators by [16
April 2008]
to put in place out of the assets of the Company security:
(i) for their outlays and
remuneration as interim liquidators and liquidators of the Company and
(ii) for any further expenses the
liquidators may reasonably incur in respect of any further proceedings in or in
connection with the liquidation including, for the avoidance of doubt, their
future outlays and legal expenses reasonably incurred in connection with their
applications referred to in paragraph (1) hereof
all in the sum of г1,000,000, said security to be established
by means of
(a) a heritable security for г500,000
over the Company's property at 1305 Shettleston Road Glasgow and
(b) a deposit of the sum of г500,000
in an interest bearing account in the name of the solicitors for the Joint
Liquidators;
(10) Appoints the Joint Liquidators within 7 days thereafter
to enrol a motion to sist the winding up.
(11) Reserves to the parties the right to apply to the Court
at any time in respect of any problems encountered in the working out of this
Interlocutor.
