(a) In relation to each type of insolvency procedure available in the legal system of this economy, what are the administrative organs/entities involved in the implementation and management of that procedure? (For example a trustee, liquidator, receiver, government official.)

 

Winding up- Liquidator singly or together with a committee of inspection comprising of creditors or their nominees.

Reconstruction/ arrangement- the company itself.

Appointment of administrator-the administrator.

Appointment of receiver manager- Receiver or Manager.

Rehabilitation following declaration as sick unit-person authorised by the Federal Government.

(b) What qualifications must each type of administrator of insolvency procedures possess? Is there a system of regulation of insolvency administrators in this economy?

 

Winding up- liquidators are chosen from a list of persons recommended by the SECP.

Receiver or manager -any person may be appointed other than a minor, person of unsound mind, body corporate, a director of the company, an undischarged insolvent, a person disqualified by a Court for the said purpose.

Administrator-to be selected from a panel maintained by the SECP on the recommendation of the SBP.

(c) Are the creditors of a corporate debtor permitted to participate in the administration of the relevant insolvency procedure, and if so, how? (For example are the creditors permitted to assist the administrator, or supervise or dictate the conduct of the administration?)

 

The creditors may participate by order of the Court through a committee of inspection (Sec.331), which acts with the liquidator.

(a) In relation to each type of insolvency procedure available in the legal system of this economy, what are the powers given to each type of administrator by statute, at general law or pursuant to the terms of the appointment? (for example power to carry on the business of the organization, to pay creditors, to compromise claims of or against the debtor, to issue or defend legal proceedings, to obtain credit, to sell property, to execute documents on behalf of the debtor.)

 

Winding up- the liquidator has with the sanction of the Court or the committee of inspection the following powers:

(a) to institute or defend any legal proceedings in the name and on behalf of the company.

(b) to carry on the business of the company so far as may be necessary for the beneficial winding up of the company.

(c) to pay any classes of creditors in full.

(d) to make any compromise or arrangement with creditors.

(e) to compromise all calls and liabilities to calls, debts and liabilities.

(f) to sell the movable and immoveable property and things in action of the company by public auction or private contract.

Additionally subject to any general or specific direction of the Court or of the committee of inspection ,the liquidator has the power to:

(a) to do all acts and deeds on behalf of the company.

(b) to prove rank and claim in the bankruptcy, insolvency or sequestration of any contributory for any balance against his estate and to take all actions in respect thereto.

(c) to draw, accept, make and endorse any bill of exchange or promissory note in the name and on behalf of the company.

(d) to raise money on the security of the assets of the company.

(e) to take out in his official name letters of administration to any deceased contributory and to do any other necessary act for obtaining payment of any money due from a contributory or his estate.

(f) to appoint an agent to do any business which the agent cannot do himself.

(g) to do all other acts as may be necessary for winding up the affairs of the company and distributing its assets.

Receiver- such powers to manage the property of the company as are assigned by the court or through instrument of appointment.

Administrator-manage the affairs of the company and exercise all powers of the directors or other persons in whom the management is vested including the power to terminate with the approval of the SECP any contract or employment which the Administrator deems detrimental to the interest of the company.

(b) To what extent and in what circumstances may each type of insolvency administrator seek assistance, advice or direction in the conduct of the administration, and from what sources? (for example the Court, his appointor, the creditors of the debtor, a solicitor, accountant or other relevant person.)

 

Winding up- the liquidator may subject to the general direction of the committee of inspection or the Court appoint an agent to do any business which he is unable to do himself (Sec.333 (2) (f)) or appoint a person entitled to appear before the Court or such person as may be prescribed to assist him in the performance of his duties. (Sec.335).

A receiver may apply to the Court for directions in relation to any matter arising in connection with the performance of his functions.

An administrator may seek instructions from the SECP both with regard to the manner in which the management of the company should be conducted as well as in relation to any matter arising in the course of such management.

(a) In relation to each type of insolvency procedure available in the legal system of this economy, what are the duties imposed upon each type of administrator by statute and at general law? (for example a duty to take possession of assets of the debtor, to realise those assets, to discharge the debt owed to his appointor, to call for proofs of debts owed to creditors, to adjudicate upon claims of creditors, to apply available assets in discharge of those claims, to report on the conduct of the debtor by the proprietors.)

 

Winding up- the liquidator shall upon his appointment:

(a) obtain a statement of affairs setting out details of the company in respect of the company 's assets, debts and liabilities, names and addresses of creditors, debts owed to the company and such other particulars as may be prescribed by the Court (Sec.328).

(b) submit a preliminary report on the affairs of the company to the Court (Sec.329).

(c) take into his custody and control all the books and papers, property, effects and actionable claims belonging to the company or to which the company appears to be entitled (Sec.330)

(d) summon meetings of creditors and contributories to determine whether a committee of inspection should be set up and to determine the membership of such committee (Sec.331).

(e) apply to the Court for summary determination of any proceedings pending in the said Court in respect of any debt due to the company. (Sec.424).

(f) exercise any and all of his powers for the effective winding up of the company such as call for proofs of debts owed to the creditors, pay any classes of creditors in full, make any compromise or arrangement with creditors or compromise any calls and liabilities to calls, debts and liabili-ties (Sec.421) administer and apply assets in discharge of those claims (Sec.388 (4)).

(g) subject to any directions given by the Court distribute funds left after providing for the expenses of the winding up among the creditors or contributories. (Sec.349).

Additional powers and duties of the liquidator in a voluntary winding up:

(a) exercise the powers of the Court under the Companies Ordinance of settling a list of contributories, and making calls.

(b) summon general meetings of the company and creditors for obtaining sanction of the company by special resolution or for any other purpose he may think fit. (Sec.387).

Duties of a Receiver- management and disposal of the property of the Company and such other duties as the Court may assign.

Duties of Administrator- management of the affairs of the company and any other duties assigned by the SECP.

(a) What remedies and/or sanctions are available in the legal system of this economy in respect of breaches of duty or transgressions committed by each type of insolvency administrator?

 

Winding up- Any liquidator making a default in complying with the provisions of the Ordinance may be ordered by the Court to make good the default or make amends within a specified time frame at the liquidator's cost (Sec.435). Any liquidator retaining any money which should have been paid by him into the company's liquidation account shall in addition to such money pay surcharge on the amount retained at the rate of 2% per month and be liable to pay any expenses or losses resulting from such failure and be also liable to disallowance of all or part of his remuneration (Sec.432 (8)). Any liquidator failing to make a regular statement to the Court on a pending winding up where proceedings have exceeded one year shall be liable to a fine extending to Rs. 100 for each day of default (Sec.429 (4)).

Administrator- The Ordinance does not prescribe any precise penalty. Any administrator involved in any transgression would however be liable under the Civil Procedure Code and for fraudulent acts under the Criminal Procedure Code.

Receiver or Manager- The Ordinance does not prescribe any precise penalty. Any receiver involved in any transgression would however be liable under the Civil Procedure Code (Order 40, Rule 4 of the Civil Procedure Code) and for fraudulent acts under the Criminal Procedure Code.

(b) Have there been actual instances of breach of duty or transgressions committed by insolvency administrators?

(c) If so, give the details of any major cases and a summary of the action taken and the results.