After studying this chapter, you should be able to:
1 Discuss the nature and types of winding up and the consequences on the company and the bank
2 Explain the duties and powers of a liquidator
3 Understand the legal issues for the banker around the process of winding up
When lawyers and bankers talk about winding up, they refer to the process of ending the life of a company. Winding up involves the sale of the company’s assets and repayment of its debts. Funds that are left over, if any, are distributed to the shareholders or otherwise disposed of in accordance with the company’s articles of incorporation and other rules and regulations.
In this chapter,1 we discuss the concept and practice of winding up and the legal issues that arise, which may involve the bank. We look at the main legislation that governs winding up in Hong Kong, namely Part V of the Companies Ordinance, and the implementing regulations in the companies (winding up) rules. This chapter also discusses the appointment of a liquidator, who assumes the functions of the board of directors and oversees the formal act of dissolution after the completion of the winding up process.
A company that has been wound up ceases to have any legal existence. All its contractual relationships, including those with its bankers, are terminated.
The process of winding up is complicated and complex, and can take months or even years to complete. In the interim, the ...