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CS Professional · Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

A winding-up petition against Kaveri Metals Ltd was presented on 5 June. On 12 June, without any order of the Tribunal, the company sold a factory plot to Mr Iyer. The winding-up order was later passed. What is the legal position of this sale?

The sale is void unless the Tribunal otherwise orders. Winding up commenced on presentation of the petition on 5 June, and under section 334 any disposition of company property after commencement is void, regardless of when the winding-up order is passed.

  1. AValid, because the winding-up order had not yet been passed on 12 June
  2. BValid, because the buyer paid full consideration
  3. CVoid, unless the Tribunal otherwise orders, since it was made after commencement of winding upCorrect
  4. DVoidable only at the option of the company's members

Explanation

Winding up commences on presentation (5 June). Section 334 makes any disposition of company property after commencement void unless the Tribunal otherwise orders. The sale on 12 June falls after commencement, so the option relying on the later order date is wrong.

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