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TMI Blog1932 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... y two shareholders of the company. The company issued two debentures for 500 each dated respectively October 6, 1928, and January 19, 1932. In February, 1932, the company's assets were estimated at 3,165 and its liabilities at 8,006, which included the sum of 1,150 11s. 9d. due to the Telsen Electric Co., (hereinafter referred to as "the petitioner"). On February 4, 1932, a writ for 205 19s. was issued by a creditor against the company. On February 17, 1932, a meeting of creditors was held at which a scheme was put forward whereby it was proposed that: (1) the company should enter into a deed of a arrangement with trustees for the creditors to pay to them a sum sufficient to provide payment of a composition of five shillings in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner. The arrangement is neither valid nor binding, for section 251, sub-section 1 of the Companies Act, 1929, does not apply to the present case, and the mere fact that the assents requiste thereunder were given is immaterial. That section applies only where a company is "about to be, or in the course of being wound up," whereas at the date when the arrangement was completed the position of the company could not be described properly as that of a company "about to be, or in the course of being, wound up." Further, section 251, sub-section 1 is one of a group of sections which is expressly declared by section 246 of the Act to apply "to every voluntary winding-up..." In present case there is not any voluntary winding-up. The company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll say, has never been construed in any case before the Court. It now appears in a series of nine sections which, by section 246 of the Act, are stated to "...apply to every voluntary winding up..." That, no doubt, is the reason why the word "voluntarily" was not inserted in the section, in re-enacting section 191 of the Companies (Consolidation) Act, 1908, after the words "wound up," but it is clear that the section applies to "every voluntary winding-up," and is not applicable to cases of a compulsory winding-up. A number of difficulties arise as to the true meaning of the section. First, what does the word "arrangement" name? The phrase used in section 153, sub-section 1, is as follows: "Where a compromise or arrangement is proposed be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1908, and in section 251 of the Companies Act, 1929, to "a company about to be...wound up," was necessary, because it might be that the arrangement was entered into before the passing of the special resolution or extraordinary resolution for voluntary winding-up. I must come to the conclusion that a composition by a company with its creditors, as a result of which the company will be solvent, is not an arrangement by a company about to be wound up within the meaning of section 251 of the Companies Act, 1929. I may add that the section present a certain number of practical difficulties. It says nothing about, and makes no provision for, a meeting of creditors, and "creditors" must be taken to include secured as well as preferential credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the petition stand over for a period which will enable that to be done. If a scheme is not passed, a compulsory order will be made upon the petition. [Accordingly it was ordered that the petition should stand over for a fortnight to enable the creditors to pass a scheme of arrangement.] May 9. It was stated to the Court that a summons had been taken out for leave to convene a meeting of creditors under section 153 of the Companies Act, 1929. The Court thereupon ordered that the petition should be adjourned until the first petition day of the following sittings, thus enabling the creditors to consider a proposed scheme under section 153 of the Companies Act, 1929. Solicitors Cochrane Cripwell for the Petitioner; G. Edmund Hodg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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