Black v United Collieries, Ltd
| Jurisdiction | Scotland |
| Judgment Date | 28 October 1904 |
| Docket Number | No. 4. |
| Date | 28 October 1904 |
| Court | Court of Session |
Lord Trayner, Lord Justice-Clerk, Lord Young.
Company—Winding-up—Objection to intimation of petition for winding-up—Just and Equitable—Companies Act, 1862 (25 and 26 Vict. cap. 89), sec. 79.—The Companies Act, 1862, enacts (sec. 79),—
‘A company under this Act may he wound up by the Court as hereinafter defined, under the following circumstances—that is to say, … (4) whenever a company is unable to pay its debts; and (5) whenever the Court is of opinion that it is just and equitable that the company should be wound up.’
Certain holders of fully paid-up preference shares, representing less than one-thirteenth of the share capital of a company, presented a petition for its compulsory winding-up, on the ground that in the circumstances it was just and equitable that it should be wound up.
On a motion being made in the Single Bills for an order for intimation, advertisement, and service, appearance was made for the company, for the holders of first and second debentures, and for almost all the creditors whose respective claims exceeded £50. Their counsel moved the Court to dismiss the petition without pronouncing an order, and stated that the intimation craved would be prejudicial to the credit of the company.
The Court, after considering minutes lodged by the petitioners and by the objectors, and coming to the conclusion that the winding-up of the company would be detrimental to all concerned, and having regard to the wishes of the creditors and of the great majority of the shareholders, refused to order intimation, and refused the prayer of the petition.
This petition was presented by William Black and others, holders of fully paid up preference shares in the United Collieries, Limited, a company having its registered office in Glasgow, praying the Court to order the Company to be wound up by the Court.
Of the thirteen petitioners named in the petition two disclaimed on the day after its presentation. The remaining eleven held preference shares to the extent of £136,488. The total share capital of the company, which was all paid up, amounted to £1,800,572.
On the case being called in the Single Bills counsel for the petitioners moved for an order for intimation, advertisement, and service. Counsel for the Company and others, who appeared as objectors, moved the Court to refuse the order and to dismiss the petition de plano.
The Court delayed consideration of the motion for intimation, and allowed the parties interested to lodge minutes. Minutes in opposition to the petition were lodged by the Company, the first and second debenture-holders, and creditors of the Company.
The minuters stated that a compulsory winding-up would result in a forced sale of going concerns, and cause great loss to the creditors and a complete loss of the shareholders' capital. This would be avoided by the issue of income debenture stock to the shareholders as resolved upon by the Company in August 1904.
On 18th October parties were heard in Single Bills upon the petition and minutes. The respective interests of parties and the nature of the objections sufficiently appear from the opinion of Lord Trayner.
Argued for the minuters;—An order for intimation and advertisement and service would injuriously affect the credit of the Company, and the Court would not pronounce it if satisfied that the petition was groundless.1 In the late case of Wotherspoon v. Brescia Mining and Metallurgical Company, LimitedSC,2 where such an order was pronounced in spite of opposition like the present, it was admitted on all hands that there must be a winding-up, and the sole question at issue was whether the winding-up should be voluntary or judicial. In such circumstances the interests of the Company could not be prejudiced by the order. The issue of the income debenture stock was the best method of saving the Company; even if it were not, that did not entitle a small minority of shareholders to stop the Company.3 The cases cited on the other side were very...
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