(a) In relation to each type of insolvency procedure available in the legal system of this economy, by what means may the administration of the corporate debtor be terminated?

 

The following insolvency procedures may be terminated in the ways set out below:

Liquidation

Liquidation can be brought to an end by dissolution of the company under section 272 of the Companies Act 1965 where the affairs of the corporate debtor have been fully wound up. Dissolution takes place, automatically, 3 months after the lodging of a prescribed return by the liquidator. The High Court has the power under section 272(6) to defer the date of dissolution, and it also has the power under section 307 to declare the dissolution void. The liquidator or any creditor or contributory can also apply to stay the winding up under section 243.

Receivership

Private receiverships come to an end when the assets of the corporate debtor have been realised and applied towards satisfaction of the debenture holder's debt. The receivership is "lifted" by the filing of prescribed forms at the Registrar of Companies.

Special Administration

There appears to be no express provision for termination of special administration. Even where a proposal has been rejected by the secured creditors or abandoned in its implementation, the Corporation may direct the special administrator to submit a new proposal. It also has the power to lift the moratorium under section 41. It may be safe to assume that once the moratorium under section 41 expires and is not renewed or is lifted as aforesaid, then to all intents and purposes, the special administration is at an end.

Scheme of Arrangement

A scheme of arrangement that has been approved by court would normally contain a provision empowering the scheme administrator to terminate the scheme under certain conditions.

(b) Who may initiate the termination of each type of insolvency procedure?

 

Initiation of the act of termination of each of the insolvency procedures mentioned below is by:

• In the case of liquidation, the liquidator.
• In the case of a receivership, the receiver and debenture-holder;
• In the case of a special administration, the Danaharta Corporation or its oversight committee; and
• In the case of a scheme of arrangement, the scheme administrator.

(c) On what grounds may each type of insolvency procedure be terminated?

 

The grounds on which each of the above named insolvency administrators might terminate the relevant insolvency procedure would be:

• In the case of liquidation, for dissolution, that the affairs of the company have been fully wound up. For a stay, one ground would be that the stay is in the public interest as there is a prospect that the company can be re-constructed and there are arrangements to pay creditors.
• In the case of a receivership, the settlement of the debt due to the debenture holder.
• In the case of special administration, the rejection or abandonment of a proposal.
• In the case of a scheme of arrangement, the irretrievable failure or successful implementation, as the case may be, of the scheme.

(d) What are the consequences for the corporate debtor of termination of the insolvency procedure? (for example to whom does control of the debtor revert following termination of the procedure; or if the debtor no longer exists, what are the procedures for and consequences of its dissolution?)

 

The consequences of termination of each type of insolvency procedure may be described as follows:

• In the case of liquidation, upon dissolution, the corporate debtor ceases to exist. In the case of a stay, although the company is not dissolved, the control would remain with the liquidator and the directors' powers would not ipso facto revive.
• In the case of receivership, the directors' powers are reinstated and control of the corporate debtor reverts to them.
• In the case of a special administration, control of the "affected person" reverts to the directors of the corporate debtor cum "affected person".
• In the case of a scheme of arrangement, control would revert to the members and the directors who still hold office when the scheme terminates.