Tuesday, 10 August 2010

Should a director's vote count in a liquidation?

In 2004 the case of Fielding v Seery seems to set out principles for rejecting the votes of certain connected parties when it comes to the appointment of an officeholder. There were upheld in more recent cases such as Power v Petrus. Are IPs acting on this? This decision would seem to be significant enough for inclusion in SIP 8.

Below is a short extract from Power which summarises the point.

"In Fielding v Seery [2004] BCC 315 HH Judge Maddocks, sitting as a judge of the High Court, set out a number of principles that governed the choice of liquidator. Among those principles were the following at 322:

"(4) A liquidator should not be a person nor be the choice of a person who has a duty or purpose which conflicts with the duties of the liquidator. There are many illustrations of this principle. I was referred in particular to Re City & County Investment Co (1877) 25 WR 342, Re Charterland Goldfields (1909) 26 TLR 132, and Re Corbenstoke (No. 2) (1989) 5 BCC 767.
(5) More specifically the liquidator should not be the nominee of a person: (a) against whom the company has hostile or conflicting claims as in Re City & County Investment Co, (and see also Deloitte & Touche AG v Johnson [1999] BCC 992; [1999] 1 WLR 1605); or (b) whose conduct in relation to the affairs of the company is under investigation as in Re Charterland Goldfields (and Re Mansel, ex parte Sayer).
(6) By contrast it is not an objection to a liquidator that he is allied to or the choice of a person who is concerned to pursue the claims of the company through the liquidator."

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