Dissolution

In one line

A winding up is deemed to commence when the petition is presented, which is what makes the avoidance provisions bite on transactions before the order; it ends when the Tribunal, on the liquidator's application or of its own opinion, orders that the company be dissolved from the date of the order; and for two years afterwards the Tribunal may declare the dissolution void so that proceedings may be taken as if the company had never been dissolved.

In exam wording: under section 357, the winding up of a company by the Tribunal under this Act shall be deemed to commence at the time of the presentation of the petition for the winding up.

Why the law has this at all

Dissolution is the end of the legal person, and the Act has to fix three moments with precision.

When the winding up begins, because a great many provisions are counted from it. The avoidance of a floating charge under s.332 runs from the commencement; dispositions under s.334 and attachments under s.335 are void if made after it; the books that must have been kept under s.338 are those for the two years immediately preceding it; and the liquidator's disclaimer under s.333 must be within twelve months after it.

When the company ends, because after that moment there is no person to sue, to hold property or to be liable.

And whether the end can be undone, because liquidations are not always complete: an asset is discovered, a claim emerges, a creditor was never told.

Section 357 answers the first by relation back to the presentation of the petition; s.302 answers the second by fixing dissolution at the date of the order; and s.356 answers the third with a two-year power to declare the dissolution void.

Section 358 then deals with a practical consequence of the first two: while a company is being wound up it cannot readily sue, so time must not run against it.

Section 357: commencement

The winding up of a company by the Tribunal under this Act shall be deemed to commence at the time of the presentation of the petition for the winding up.

The section was substituted by s.255 and the Eleventh Schedule of the Insolvency and Bankruptcy Code 2016 with effect from 15 November 2016, the substitution reflecting the disappearance of voluntary winding up from the Act.

Two consequences, and they are the reason the section matters.

The proceeding relates back. Everything done between the presentation of the petition and the winding up order is done after the commencement, and is therefore exposed to s.334, which makes dispositions void unless the Tribunal orders otherwise, and to s.335, which makes attachments, distress, executions and sales without leave void. That is why a company facing a petition must obtain the Tribunal's sanction before dealing with its property, as [Avoidance of Antecedent Transactions] explains.