Main articles: Liquidation and Chapter 7, Title 11, United States Code
Disused assets of a liquidating business require buyers, but ultimately the government bears the cost of cleaning up. Battersea Power Station was decommissioned by the CEGB in 1975, and a series of private buyers since 1986 have abandoned their projects or gone into administration.
Liquidation is the final, most frequent, and most basic insolvency procedure. Since registered companies became available to the investing public, the Joint Stock Companies Winding-Up Act 1844 and all its successors contained a route for a company's life to be brought to an end. The basic purpose of liquidation is to conclude a company's activities and to sell off assets (i.e. "liquidate", turn goods into "liquid assets" or money) to pay creditors, or shareholders if any value remains. Either the company (its shareholders or directors) can iniate the process through a "voluntary liquidation", or the creditors can force it through a "compulsory liquidation". A voluntary liquidation begins if the company's members vote to liquidate with a 75 per cent special resolution.[135] If the directors can make a statutory declaration that the company is solvent the directors or shareholders remain in control,[136] but if the company is insolvent, the creditors will control the voluntary winding up.[137] Otherwise, a "compulsory liquidation" may be initiated by either the directors, the company, some shareholders or creditors bringing a petition for winding up to the court.[138] In principle, almost any member (this is usually shareholders, but can also be anyone registered on the company's member list) can bring a petition for liquidation to begin, so long as they have held shares for over six months, or there is only one shareholder.[139] In Re Peveril Gold Mines Ltd[140] Lord Lindley MR held that a company could not obstruct a member's right to bring a petition by requiring that two directors consented or the shareholder had over 20 per cent of share capital. A member's right to bring a petition cannot be changed by a company constitution. However, in Re Rica Gold Washing Co[141] the Court of Appeal invented an extra-statutory requirement that a member must have a sufficient amount of money (£75 was insufficient) invested before bringing a petition.[142] For creditors to bring a petition, there must simply be proof that the creditor is owed a debt that is due. In Mann v Goldstein[143] the incorporated hairdressing and wig business, with shops in Pinner and Haverstock Hill, of two married couples broke down in acrimony. Goldstein and his company petitioned for winding up, claiming unpaid directors fees and payment for a wig delivery, but Mann argued that Goldstein had received the fees through ad hoc payments and another company owed money for the wigs. Ungoed Thomas J held the winding up petition was not the place to decide the debt actually existed, and it would be an abuse of process to continue.[144]
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Disused assets of a liquidating business require buyers, but ultimately the government bears the cost of cleaning up. Battersea Power Station was decommissioned by the CEGB in 1975, and a series of private buyers since 1986 have abandoned their projects or gone into administration.
Liquidation is the final, most frequent, and most basic insolvency procedure. Since registered companies became available to the investing public, the Joint Stock Companies Winding-Up Act 1844 and all its successors contained a route for a company's life to be brought to an end. The basic purpose of liquidation is to conclude a company's activities and to sell off assets (i.e. "liquidate", turn goods into "liquid assets" or money) to pay creditors, or shareholders if any value remains. Either the company (its shareholders or directors) can iniate the process through a "voluntary liquidation", or the creditors can force it through a "compulsory liquidation". A voluntary liquidation begins if the company's members vote to liquidate with a 75 per cent special resolution.[135] If the directors can make a statutory declaration that the company is solvent the directors or shareholders remain in control,[136] but if the company is insolvent, the creditors will control the voluntary winding up.[137] Otherwise, a "compulsory liquidation" may be initiated by either the directors, the company, some shareholders or creditors bringing a petition for winding up to the court.[138] In principle, almost any member (this is usually shareholders, but can also be anyone registered on the company's member list) can bring a petition for liquidation to begin, so long as they have held shares for over six months, or there is only one shareholder.[139] In Re Peveril Gold Mines Ltd[140] Lord Lindley MR held that a company could not obstruct a member's right to bring a petition by requiring that two directors consented or the shareholder had over 20 per cent of share capital. A member's right to bring a petition cannot be changed by a company constitution. However, in Re Rica Gold Washing Co[141] the Court of Appeal invented an extra-statutory requirement that a member must have a sufficient amount of money (£75 was insufficient) invested before bringing a petition.[142] For creditors to bring a petition, there must simply be proof that the creditor is owed a debt that is due. In Mann v Goldstein[143] the incorporated hairdressing and wig business, with shops in Pinner and Haverstock Hill, of two married couples broke down in acrimony. Goldstein and his company petitioned for winding up, claiming unpaid directors fees and payment for a wig delivery, but Mann argued that Goldstein had received the fees through ad hoc payments and another company owed money for the wigs. Ungoed Thomas J held the winding up petition was not the place to decide the debt actually existed, and it would be an abuse of process to continue.[144]
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