PART 4: PART 4: Provisions Applying to Liquidations Generally
Section 1: Section 1: General Provisions
Article 87 - Commencement of winding up(1) Subject to (2), a winding up by the
QFC Courtis deemed to have commenced at the time of the making of the winding up application.(2) If, before the application for the winding up of the Companywas made to the QFC Court, a resolution had been passed by the Companyfor voluntary winding up, the winding up is deemed to have commenced at the time of the passing of the resolution.
Article 88 - General functions of the Liquidator in winding up by the QFC Court
The functions of the
Liquidatorof a Companywhich is being wound up by the QFC Courtare to ensure that the assets of the Companyare got in or otherwise secured, realised and distributed to the Company'screditors and, if there is a surplus, to the persons entitled to it.
Article 89 - Appointment or removal of Liquidator by the QFC Court(1) If from any cause whatever there is no
Liquidatoracting, the QFC Courtmay appoint a Liquidator.(2) The Liquidatormay be removed from office only by an order of the QFC Courtor, in the case of a members' voluntary winding up, by a general meeting of the Companysummoned specially for that purpose, or, in the case of a Creditors' Voluntary Winding Up, by a general meeting of the Company'screditors summoned specially for that purpose in accordance with these Regulations.
Article 90 - Power to exclude creditors not proving in time(1) The
Liquidatormay fix a time or times within which creditors are to prove their debts or claims (in accordance with Section 8 of Part 5 below) or be excluded from the benefit of any distribution made before those debts are proved.(2) On application from an interested party, the QFC Courtmay extend the time or times set by the Liquidatorfor the filing of proofs of debt.
Article 91 - Distribution of Company's property and priority of payments in a winding up(1) Subject to the provisions of these
Regulationsas to preferential payments and to the 'Client Money Distribution Rules' applicable to Authorised Firmsas set out in the Regulatory Authority's"Asset Rulebook", the Company'sproperty in a winding up shall on the winding up be applied in satisfaction of the Company'sliabilities which rank pari passu and, subject to that application, shall (unless the articles otherwise provide) be distributed among the members according to their rights and interests in the Company, save that a creditor may agree to rank in priority after any other debts.(2) In a winding up, the priority of payments shall be as follows:(A) Secured Creditorsto the extent of their Security Interestand in the order of priority provided for in Part 5 of the Security Regulations;(B) costs and expenses, including the Liquidator'sremuneration, properly incurred by the Liquidatorin the exercise of his functions and, where the liquidation was immediately preceded by an administration, the Administrator'sremuneration, properly incurred by the Administratorin the exercise of his functions;(C) preferential creditors as defined in Article 148; then(D) unsecured creditors.
Article 92 - Power to disclaim onerous property(1) The
Liquidatormay, by the giving of the prescribed notice, disclaim any onerous property and may do so notwithstanding that he has taken possession of it, endeavoured to sell it, or otherwise exercised rights of ownership in relation to it.(2) Onerous property for the purposes of this Article 92 means any unprofitable contract and any property of the Companywhich is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act.(3) A disclaimer under this Article 92:(A) operates so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the Companyin or in respect of the property disclaimed; but(B) does not, except so far as is necessary for the purpose of releasing the Companyfrom any liability, affect the rights or liabilities of any other person.(4) Any person sustaining loss or damage in consequence of the operation of a disclaimer under this section is deemed a creditor of the Companyto the extent of the loss or damage and accordingly may prove for the loss or damage in the winding up.
Article 93 - Notification that Company is in Liquidation
Companyis being wound up, every business letter, written order for goods or services, invoice, receipt, written demand for payment and similar documentation issued by or on behalf of the Company, or a Liquidatorof the Company(whether in hard copy, electronic or any other form), being a document on or in which the name of the Companyappears, and all the Company'swebsites, shall contain a statement that the Companyis being wound up.
Article 94 - [Deleted]
Article 95 - Reference of questions to the QFC Court(1) The
Liquidatoror any shareholder or other person liable to contribute to the assets of the Companyor creditor may apply to the QFC Courtto determine any question arising in the winding up of a Companyby the QFC Court.(2) The Liquidatoror any aggrieved person may apply to the QFC Courtfor an order in relation to the exercise of the powers or functions of the Liquidator. Any person who fails to comply with a summons or direction of the Liquidatorreferred to in Schedule 1 commits a contravention and is liable to a financial penalty.(3) The QFC Courtmay make such order on an application under this Article as it thinks just, including where appropriate an order enforcing or setting aside any direction given or requirement made by the Liquidatorto or of a person.
Article 96 - Dissolution and early dissolution(1) Articles 96(2) and (3) apply, in the case of a
Companybeing wound up, where the Liquidatorhas sent to creditors his final account and return.(2) On the expiration of three months from the date of despatch of the final account and return the Companyis deemed to be dissolved and the Liquidatormust apply to the CROfor the Companyto be struck from the register.(3) The QFC Courtmay, on the application of any other person who appears to the QFC Courtto be interested, make an order deferring the date on which the dissolution of the Companyis to take effect for such time as the QFC Courtthinks fit.(4) Where the realisable assets of the Companyare insufficient to cover the expenses of the winding up, and the affairs of the Companydo not require any further investigation, the Liquidatormay at any time apply to the CROfor the early dissolution of the Company.(5) Before making an application under Article 96(4), the Liquidatorshall give not less than 28 days' notice of his intention to do so to the Company'screditors and contributories.
Article 97 - Fraud in anticipation of winding up
Companyis ordered to be wound up by the QFC Court, or passes a Resolution For Voluntary Winding Up, Article 105 shall apply in respect of any person, being a past or present officer of the Company, who, within the 12 months immediately preceding the commencement of the winding up, has:(1) concealed any part of the Company'sproperty to the value of US$200.00 or more; or concealed any debt due to or from the Company;(2) fraudulently removed any part of the Company'sproperty to the value of US$200.00 or more;(3) concealed, destroyed, mutilated or falsified any book or paper affecting or relating to the Company'sproperty or affairs;(4) made any false entry in any book or paper affecting or relating to the Company'sproperty or affairs;(5) fraudulently parted with, altered or made any omission in any document affecting or relating to the Company'sproperty or affairs;(6) pawned, pledged or disposed of any property of the Companywhich has been obtained on credit and has not been paid for (unless the pawning, pledging or disposal was in the ordinary course of the Company'sbusiness); orin each case with the intention of defrauding the creditors of the Companyor concealing the state of the Companyfrom any person.
Article 97A - Misconduct in the course of winding up
Companyis ordered to be wound up by the QFC Court, or passes a Resolution For Voluntary Winding Up, Article 105 shall apply in respect of any person, being a past or present officer of the Company, who:(1) does not to the best of his knowledge and belief fully and truly disclose to the Liquidatorall of the Company'sproperty, and how and to whom and for what consideration and when the Companydisposed of any part of that property (except such part as has been disposed of in the ordinary course of the Company'sbusiness); or(2) does not deliver up to the Liquidator(or as he directs) all such part of the Company'sproperty as is in his custody or under his control, and which he is required by law to deliver up; or(3) does not deliver up to the Liquidator(or as he directs) all books and papers in his custody or under his control belonging to the Company; or(4) knowing or believing that a false debt has been proved by any person in the winding up, fails to inform the Liquidatoras soon as practicable; or(5) attempts during the winding up to account for any part of the Company'sproperty by fictitious losses or expenses or at any meetings of the Company'screditors within the 12 months preceding the winding up.
Article 98 - Transactions in fraud of creditors(1) When a
Companyis ordered to be wound up by the QFC Courtor passes a Resolution For Voluntary Winding Up, Article 105 shall apply in respect of any person, being at the time an officer of the Company, who:(A) has made or caused to be made any gift or transfer of, or a Security Intereston, or has caused or connived at the levying of any execution against, the Company'sproperty; or(B) has concealed or removed any part of the Company'sproperty since, or within two months before, the date of any unsatisfied judgment or order for the payment of money obtained against the Company.
Article 99 - Falsification of Company's books
Companyis being wound up, Article 105 shall apply to an officer or shareholder or other person liable to contribute to the assets of the Companyif he destroys, mutilates, alters or falsifies any books, papers or securities, or makes or has actual or constructive knowledge of the making of any false or fraudulent entry in any register, book of account or document belonging to the Companywith intent to defraud or deceive any person.
Article 100 - Material omissions from statement relating to Company's affairs
Companyis being wound up, whether by the QFC Courtor voluntarily, Article 105 shall apply to any person, being a past or present officer of the Company, who makes any material omission in any statement relating to the Company'saffairs with intent to defraud any person.
Article 101 - False representations to creditors(1) When a
Companyis being wound up, whether by the QFC Courtor voluntarily, Article 105 shall apply to any person, being a past or present officer of the Company, who makes any false representation or commits any other fraud for the purpose of obtaining the consent of the Company'screditors or any of them to an agreement with reference to the Company'saffairs or to the winding up.(2) A person of the kind specified in Article 101(1) is deemed to have made such false representation if, prior to the winding up, he has made any false representation, or committed any other fraud, for that purpose.
Article 102 - Fraudulent trading
If in the course of the winding up of a
Companyit appears that any business of the Companyhas been carried on with intent to defraud creditors of the Companyor creditors of any other person, or for any fraudulent purpose, Article 105 shall apply to any persons who were knowingly parties to the carrying on of the business in the manner mentioned above.
Article 103 - Wrongful trading
If in the course of the winding up of a
Companyit appears that the Companyhas gone into insolvent Liquidationand at some time before the commencement of the winding up of the Companyone or more directors of the Companyknew or ought to have known of that there was no reasonable prospect of the Companyavoiding going into insolvent Liquidation, Article 105 shall apply to such person.
Article 104 - Shadow Directors
Article 105 - Summary remedy against delinquent directors, Liquidators, etc
QFC Courtmay, on application by a Liquidatorin relation to any conduct referred to in Articles 97 to 103, make any orders as the QFC Courtsees fit in relation to a person to whom this Article 105 applies, including one or more of the following orders:(1) an order to return or pay to the Companyany money or other property of the Companywhich he has misapplied or retained, or become accountable for;(2) an order to compensate the Companyin respect of any misfeasance or breach of any fiduciary or other duty in relation to the Company;(3) an order to make such contributions (if any) to the Company'sassets as the QFC Courtthinks proper; or(4) an order requiring the person to do, or not to do, any act or thing.
Article 106 - Restriction on re-use of Company names(1) Where a
Company(the " Liquidating Company") has gone into insolvent Liquidationand a person was a director or Shadow Directorof that Companyat any time in the period of 12 months ending with the day before it went into Liquidation, that person may not, except with the leave of the QFC Court, within the period of five years following the Liquidationof the Liquidating Company, be a director of or have any connection with any Companywhose name is a name by which the Liquidating Companywas known at any time in that period of 12 months, or whose name is so similar to the name of the Liquidating Companyas to suggest an association with that Company.(2) A person who fails to comply with Article 106(1) commits a contravention and is liable to a financial penalty.(3) A person is personally responsible for all the relevant debts of a Companyif at any time he is involved in the management of the Companyin contravention of Article 106(1).
Article 107 - Mutual credit and set-off(1) Subject to Article 107(5) this Article applies where, before the
Companygoes into Liquidation, there have been mutual credits, mutual debts or other mutual dealings between the Companyand any creditor of the Companyproving or claiming to prove for a debt in the Liquidation.(2) An account shall be taken of what is due from each party to the other in respect of the mutual dealings, and the sums due from one party shall be set off against the sums due from the other.(3) Sums due from the Companyto another party shall not be taken into account under Article 107(2) if:(A) that other party had notice at the time they became due that a meeting of creditors had been summoned under Article 71 or (as the case may be) an application for the winding up of the Companywas pending;(B) the Liquidationwas immediately preceded by an administration and the sums became due during the administration; or(C) the Liquidationwas immediately preceded by an administration and the other party had notice at the time that the sums became due that:(i) an application for an Administration Orderwas pending; or(ii) any person had given notice of intention to appoint an Administrator.(4) Only the balance (if any) of the account is provable in the Liquidation. Alternatively (as the case may be) the amount shall be paid to the Liquidatoras part of the assets.(5) Where, before the Companygoes into Liquidation, contractual set-off or netting arrangements have been entered into between the Companyand any creditor of the Company, those arrangements shall apply in preference to the provisions of Article 107(1) to (4), except where such set-off or netting arrangements would be considered transactions at an undervalue under Article 142 or preferences under Article 143.
Article 108 - Remuneration of Liquidators
The remuneration of a
Liquidatorshall be fixed in accordance with the provisions which apply to the remuneration of an officeholder under Part 5.
Article 109 - Company Arrangement in Liquidation(1) If the
Liquidatorof a Companyproposes an Arrangementin the course of being wound up, the QFC Courtmay do one or both of the following, namely:(A) by order stay all proceedings in the winding up; and/or(B) give such directions with respect to the conduct of the winding up as it thinks appropriate for facilitating the Arrangement.
Article 109A - Release of Liquidators(1) A person who has ceased to be a
Liquidatorin a winding up by the QFC Courtby reason of his resignation, removal or vacation of office has his release at such time and upon such conditions as the QFC Courtmay determine.(2) Where a person has his release under this section, he is, subject to Article 141A (Misfeasance), with effect from the time specified above, discharged from all liability both in respect of acts or omissions of his in the winding up and otherwise in relation to his conduct as Liquidator.