State the legal consequences of a winding up order made against a company.
ANSWER
All floating charges created the company crystallize and become fixed.
• The company ceases to carry on business except such as may be required for the beneficial winding up of the company.
• Any disposition of the company’s property including choses in action, any transfers of shares or alteration in the status of members of the company is void.
• Any attachment, distress or execution put in force against the estate or effects of the company is void.
• Actions or legal proceedings or against the company are automatically stated.
• By virtue of his office, the official receiver becomes the provisional liquidator. Director’s powers become functus officio i.e. not exercisable.
• Employees of the company are ipso facto dismissed. However, those who continue to render services and receive wages are deemed to have entered into a new contract of service with the liquidator.