Southard & Company Ltd Re
| Jurisdiction | England & Wales |
| Date | 1979 |
| Year | 1979 |
| Court | Chancery Division |
Company - Winding up - Petition - Subsidiary company put info creditors voluntary liquidation by its parent - Parent company later presenting petition for winding up by court - Petition supported by member of same group - Petition opposed by minority in value of shareholders - Whether company should be wound up by court
A company, the wholly-owned subsidiary of another, was indebted to a bank. It later gave another bank a debenture charging all its assets and undertaking. The original debt was taken over by the second bank at the company's request and supported by the guarantee of the company's parent. Three months later the parent company placed the subsidiary company in creditors' voluntary liquidation. After about a month the parent company presented a petition for winding up by the court on the ground that on a compulsory winding up the assets of the company would be realised more expeditiously and economically and, two days later, it paid the bank a sum for an assignment of the debt and of the debenture. The petition was supported by another company in the same group. The petition was opposed by seven creditors whose debts amounted to a small proportion only of the indebtedness of the unsecured petitioning and supporting creditors.
On the question whether the company should be wound up by the court:—
Held, dismissing the petition, that there was no reason to believe that the assets of the company would be realised more expeditiously and economically if there were a compulsory winding up; that since the petition was presented and supported only by creditors who belonged to the same group of companies as the company in liquidation their wishes did not carry a weight commensurate with the size of their indebtedness, and since section 346 of the
The following cases are referred to in the judgment:
A.B.C. Coupler and Engineering Co. Ltd. In re [
Home Remedies Ltd., In re [
Karsberg (B.) Ltd., In re [
Macrae (P. & J.) Ltd., In re [
Millward (James) and Co. Ltd., In re [
Swain (J.D.) Ltd., In re [
Vuma Ltd., In re [
No additional cases were cited in argument.
PETITION
At an extraordinary general meeting of Southard & Co. Ltd. held on September 18, 1978, the petitioning creditor, Seton Trust Ltd., placed its wholly-owned subsidiary, Southard & Co. Ltd. (“the company”), in creditors' voluntary liquidation. At that date the company was said to owe its parent £47,140. On October 11, 1978, the petitioning creditor presented a petition for the winding up of the company by the court. The petition declared that the company owed the petitioner £40,504, being money lent to the company together with interest, that the company was insolvent and unable to pay its debts and that the petitioner believed that the assets of the company would be realised more expeditiously and more economically by the official receiver than by the joint liquidators appointed in the voluntary liquidation. The petitioning creditor and the supporting creditor were both of the same group as the company in liquidation. There were seven relevant opposing creditors who were a minority in value.
The facts are set out in the judgment.
Jeremiah Harman Q.C. and Oliver Albery for the petitioning creditor.
John Lindsay for the opposing creditors.
November 23. BRIGHTMAN J. read the following judgment. This is a creditors' petition to wind up a company. The petition is presented by the parent company and is supported by an associated company. The petitioning creditor has already placed the company in voluntary liquidation. The petitioning creditor and its associated company now desire a compulsory order; the minority of creditors wish the voluntary liquidation to continue. Reasons are given on each side. The question of law is upon what principles this court should exercise its undoubted discretion to make or refuse a winding up order.
The company was incorporated in March 1960. It carried on business as wine merchants. It is a wholly-owned subsidiary of the petitioning creditor, Seton Trust Ltd. The paid-up capital of the company is £113,450. According to the evidence of the petitioning creditor, at some time before the end of May 1978 the company was indebted to the National Westminister Bank in about £101,000 on loan account and about £53,000 on overdraft account. On May 24 the company gave Barclays Bank a debenture to secure future indebtedness, charging all its assets and undertaking. Thirteen days later, on June 6, Barclays Bank paid £153,968 to National Westminster Bank and took over the debt. This was done at the request of the company and was supported by the guarantee of the petitioning creditor, the company's parent.
On September 18, the petitioning creditor (the parent company) placed the company in creditors' voluntary liquidation. At that date the company is said to have owed its parent company £47,140. Mr. Stevens was...
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