Re Opera Ltd
| Jurisdiction | England & Wales |
| Year | 1891 |
| Date | 1891 |
| Court | Court of Appeal |
Company - Winding-up - Debenture-holders - Floating Security - Execution Creditor - Sheriff - Priority.
The sheriff, on seizing, on behalf of an execution creditor, goods belonging to a limited company, takes — at all events before sale by him — subject to the rights of debenture-holders under debentures charging all the property of the company as security for the debenture debt: In re Standard Manufacturing CompanyF1.
But whether, after sale by the sheriff, the debenture-holders lose their priority, quære.
At the time of the presentation of a petition for winding up a limited company, the sheriff was in possession of goods of the company which he had seized under writs of fi. fa. These goods were covered by debentures charging all the company's undertaking and property as a floating security for the debenture debt. Subsequently to the presentation of the petition the sheriff gave up possession of the goods, and, a winding-up order having been made, they were sold by the official liquidator, who retained the proceeds.
Upon a summons by the sheriff against the liquidator and the debenture-holders, to have the judgment debts and costs paid out of the proceeds of sale:—
Held (reversing Kekewich, J.), that the sheriff was not entitled to be paid in priority to the debenture-holders, and the summons was accordingly dismissed with costs, but without prejudice to any application by the sheriff for payment of his claim out of any money in the hands of the liquidator not subject to or charged by the debentures.
THIS was a consolidated appeal by the official liquidator and the debenture-holders of the above company from the decision of Mr. Justice KekewichF2.
The appeal was heard on the 18th of July, 1891.
Marten, Q.C., E. Beaumont, and Manby, for the liquidator and debenture-holders:—
The first objection we take to the decision of the learned Judge below is that the position of the debenture-holders in the matter has not been sufficiently regarded. Our contention is that the debenture-holders have, by virtue of their security, a clear priority over the claim of the sheriff on behalf of the execution creditors. In the recent case of In re Standard Manufacturing CompanyF3, the Court of Appeal stated, in the course of the argument on that particular pointF4, that the rights of a debenture-holder are superior to those of an execution creditor. It is clear from the reports of the case that the statements so made by the Court amount to an actual decision on that point.
[FRY, L.J.:— Is there any case reported in which the right of the debenture-holder has been postponed to that of the execution creditor?]
There is no such case to be found.
[LINDLEY, L.J.:— We think the observations of the...
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