Winding Up

AuthorSuzanne Ffolkes Goldson
ProfessionAttorney-at-Law and Senior Lecturer in the Faculty of Law at The University of the West Indies, Mona
5. Winding Up
When the Companies Act 2004 was enacted, a decision was made not to amend
the provisions relating to corporate rescue, insolvency and winding up until the advent
of an Insolvency Act.1 e provisions relating to the winding up of insolvent companies
in the 1965 Companies Act, therefore, survived the new Companies Act 2004, until
the enactment of the Insolvency Act 2014, which has as its objects:
1. the rehabilitation of debtors and the preservation of viable companies,
having due regard to the protection of the rights of creditors and other
stakeholders; and
2. fair allocation of the costs of insolvencies with the overriding interest of
strengthening and protecting Jamaica’s economic and nancial system and
the availability and ow of credit within the economy.2
e old insolvency regime was time-consuming and costly, created stigma, created
little or no provision for rescue and rehabilitation of the business and aairs of the
debtor, and consisted of very few specialists. Oftentimes, other remedies were used
for addressing insolvency, including informal agreements, compromises, constructive
and remedial trusts, Mareva injunctions or freezing orders, and the oppression
remedy. Any of these remedies, however, could put the debtor at further risk. Prior
to the Insolvency Act, the Companies Act contemplated rescue through Schemes of
Arrangement, otherwise, death of the company was the only other option either by
receiverships or liquidation and winding up. ere were no provisions for voluntary
out-of-court arrangements for moratoria or temporary stays of execution.3
A number of provisions of the Companies Act 2004 have now been repealed or
amended to reect the Insolvency Act 2014. An insolvent company cannot now be
wound up under the Companies Act. e Insolvency Act provides, inter alia, for the
ling of a Proposal or an ‘Intention to Make a Proposal’ to creditors by a company
which is insolvent, or facing imminent insolvency, in order to provide short-term relief
from their claims. ere is an automatic stay of proceedings upon the ling of a notice
of intention to make a Proposal or when a Proposal is led,4 and special provision
is made for securing nancing during the stay of proceedings (Debtor in Possession
1. Report of the Joint Select Committee on the Bill Shortly Entitled e Companies Act
1998 dates January, 2001.
2. Insolvency Act 2014, s 3.
3. S Ffolkes Goldson, ‘e Reform of Jamaica’s Insolvency Law: Balancing the Interests of
Creditors and Debtors’ 37 (2) West Indian Law Journal 171.
4. Insolvency Act 2014, s 4 and 5.
Winding Up
Financing).5 e concept of the Proposal, therefore, facilitates the preservation of the
insolvents’ assets for the benet of their creditors, and also the rehabilitation of the
e old provisions on winding up of solvent companies, however, are retained
in the Companies Act 2004 which still largely reect the position under the repealed
Companies Act 1965.
A. Arrangements and Reconstructions
Section 205A, which is a new section, states that sections 206–211 of the
Companies Act,
…may be applied in conjunction or together with Part III of the Insolvency Act,
but where a notice of intention to make a proposal or a proposal is led under the
Insolvency Act in respect of a company, any compromise or arrangement between
a company and its creditors, or with any class of them, shall be eected only in
accordance with the Insolvency Act.6
Sections 206–211 are substantially the same as sections on arrangements and
reconstructions in the repealed Companies Act 1965. e old UK position is therefore
Section 206 denes ‘arrangement’ for the purposes of sections 206 and 207 as
including a reorganization of the share capital of the company by the consolidation of
shares of dierent classes or by division of shares of dierent classes or by both those
methods. ‘Company’ for the purposes of section 206 and 207 means any company
liable to be wound up under the Companies Act.
Section 206(1) provides that a company, any creditor or member of the company,
or the trustee (where a company is in the course of being wound up), may make a
summary application to the Court to order a meeting of the creditors, or class of
creditors, or of the members of the company, or class of members in order to sanction
any compromise or arrangement that is proposed between them.
Section 206(2) provides that any compromise or arrangement agreed by a majority
in number representing three-fourths in value of the creditors or class of creditors or
members or class of members as the case may be, present and voting either in person
or by proxy, shall be binding on all those persons concerned and also on the company
or the trustee and contributories of the company (where a company is in the course of
being wound up), if sanctioned by the Court.
Section 206(3) provides that the order must be delivered to the Registrar for
registration and a copy of every such order shall be annexed to every copy of the
Articles of the company issued after the order has been made before it has legal eect.
5. Insolvency Act 2014, s 55.
6. Ibid., s 311 amending Companies Act 2004.
7. UK Companies Act 1948, s 206.

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