SECTION N - TERMINATION OF ADMINISTRATION

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

Winding up under the Companies Ordinance: The administration ceases upon the dissolution of the company. Nonetheless, an Official Liquidator (appointed by the Court) may be replaced by the Court, as if for personal disability such a Liquidator resigns, the Court will appoint his replacement. A creditor appointed liquidator may resign only for personal disability or may be removed by the Court. His replacement is to be made by the creditors in general meeting.

Management by Administrator under the Companies Ordinance: This administration ceases by order of the SEC. An Administrator may be replaced by the SEC.

Rehabilitation of companies owning sick industrial units under the Companies Ordinance: By the completion of the implementation of the rehabilitation plan to the satisfaction of the Federal Government, or the rescinding of the rehabilitation plan by the Federal Government.

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

- In the case of a winding up, administration ceases automatically upon dissolution.
- In the case of Management by Administrator, the decision for terminating the Administrator is taken by the SEC.
- In the case of the Rehabilitation of companies owning sick industrial units, the decision for termination rests with the Federal Government.

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

Winding up under the Companies Ordinance

In the case of winding up, after all the affairs of the company hav been wound up, including payment of the debts of the company to the creditors and undistributed assets refunded to the contributories. Further, Section 350 of the Companies Ordinance provides that when the affairs of a company have been wound up, or when the Court is of the opinion that the Official Liquidator cannot proceed with the winding up of a company for want of funds and assets, the Court will make an order that the company be dissolved from the date of the order, and the company stands dissolved accordingly. A similar power for the Courts would subsists in relation to voluntary winding up's.

Management by Administrator under the Companies Ordinance

This procedure may be withdrawn by the SEC, when satisfied that management of the affairs of the company is no longer required.

Rehabilitation of companies owning sick industrial units under the Companies Ordinance

This insolvency procedure may be terminated by the SEC once the rehabilitation plan has been implemented or for any other reasons as the Federal Government deems expedient.

(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?)

In a winding up, the company is dissolved and ceases to exist. Any money representing unclaimed dividends or undistributed assets in the hands of the Official Liquidator or Liquidator at the date of dissolution is paid into the State Bank of Pakistan to the credit of the Federal Government in an account specified as the Companies Liquidation Account (Section 432). Therefore, if any creditor has not received his dividend, he may claim the same from the State Bank of Pakistan.
In the case of a Management by Administrator, where the SEC determines that purposes for which administrator is appointed have been fulfilled it may terminate the Administrator and allow the company to appoint directors and take over the management of the company. The creditors position will remain unchanged.
In the case of Rehabilitation of a company owning a sick industrial unit, the consequences of a termination of this type of procedure would depend upon the rehabilitation plan in question. The management of the company does not get vested in the Federal Government, or person nominated by it to oversee the plan, and, the rehabilitation plan can at the outset itself provide for a removal and appointment of directors (including the chief executive) or other officer of the company. The impact on the creditors will depend upon the terms of the Rehabilitation Plan.