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

After the Tribunal ordered winding up of Orion Foods Ltd, its finance director Mr. Rao refused to appear before the inspector, saying the winding-up order ended his obligations. Which statement is correct under section 226?

Mr. Rao is wrong. The second proviso to section 226 says nothing in the winding up order absolves any director or other employee from participating in proceedings before the inspector or from liability arising from the inspector's findings.

  1. AHe is right, since the company is now under the Company Liquidator
  2. BHe is right, but only if the liquidator gives him a written release
  3. CHe is wrong, as nothing in the winding up order absolves any director or employee from participating before the inspector or from liability arising from the inspector's findingsCorrect
  4. DHe is wrong, but only the managing director must participate

Explanation

The second proviso to section 226 states that nothing in the winding up order absolves any director or other employee from participating in the inspector's proceedings or from liability resulting from the findings. His refusal is therefore unjustified. The proviso covers directors and other employees, not only the managing director.

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