Winding Up

• Pages: 324-333

324

WINDING UP.

(179) WINDING UP OF COMPANY.

Meanings of “incorporation” and “winding up”.

“While incorporation brings about a company in terms of establishment, winding up seems to be

the opposite, as it closes down the company.” – PerTobi, J.S.C., in A-G., Lagos State v. Eko Hotels

Ltd. Suit No. S.C. 147/2002; (2006) 18 N.W.L.R. (Pt. 1011) 378 at 458.

(180) PROVISIONAL LIQUIDATOR

Function and status of provisional liquidator.

“A provisional liquidator is deemed an officer of the Court and the essential purpose for the

appointment is to enable the provisional liquidator take control of the assets of the Company and

preserve them before a winding-up order is made. Further, the language employed under section

422(1) above also shows that another essential purpose of the Court in appointing a liquidator is

to conduct winding-up proceedings of a Company.” – PerOguntade, J.C.A., in S.B.N. Plc. v. NDIC

Suit No. CA/L/202/2002; (2006) 9 N.W.L.R. (Pt. 986) 424 at 440.

Position of provisional liquidator where petition for winding-up is refused.

“It has been held that if the court refuses to make a winding-up order on the hearing of the petition,

it ought to discharge any provisional liquidator whom it has already appointed, and restore all

parties to the position they would have occupied if he had never been appointed at all: see Re Dry

Docks Corporation of London(1888) 39 Ch. 306.” – PerUwaifo, J.S.C., in Gen. & Aviation Serv.

Ltd. v. Thahal Suit No. S.C. 222/2000; (2004) 10 N.W.L.R. (Pt. 880) 50 at 77.

Relevant considerations for grant or refusal of application for appointment of provisional

liquidator.

(1) “There is a deliberate procedure to be followed and this is provided in rule 21 of the Companies

Winding-up Rules, 1983 (Cap. 59) Laws of the Federation of Nigeria, 1990 which reads thus:

“21(1) After the advertisement of a petition for the winding - up of a company by the Court, upon

the application of a creditor, or of a contributory, or of the company,and upon proof by affidavit

of sufficient ground for the appointment of a provisional liquidator,the Court, if it thinks fit and

upon such terms as in the opinion of the Court shall be just and necessary, may make the

appointment. (2) The order appointing the provisional liquidator shall bear the number of the

petition, and shall statethe nature and a short description of the property of which the provisional

liquidator has performed any other duty prescribed by these rules. (3) The provisional liquidator

shall pay the official receiver such sum, if any, as the Court directs. (4) The order of appointment

of a provisional liquidator shall be in Form 11 in the Appendix with such variations as

circumstances may require.”[Italicsmine] It can be seen that the appointment must take into

consideration (a) proof by affidavit of sufficient ground for the appointment of a provisional

liquidator: sub-rule (1); (b) the previous experience of the provisional liquidator, the particulars of

the nature and description of the property with which he had dealt being stated: sub-rule (2). As

already indicated proof by affidavit must depend on facts and circumstances. The so-called

appointment couched thus, “that an order is hereby made appointing a fit person as a provisional

liquidator with the assistance of the parties,” by the trial Court and affirmed by the Court of Appeal

is completely erroneous and cannot be allowed to stand. The injunctive and preservation orders

were also made upon no facts and are accordingly wrong in law.” – PerUwaifo, J.S.C., in Gen. &

Aviation Serv. Ltd. v. Thahal Suit No. S.C. 222/2000; (2004) 10 N.W.L.R. (Pt. 880) 50 at 78 - 79.