Other Avenues for Creditors
Other avenues for creditors:
- If a creditor’s claim is rejected, the creditor may still seek to establish liability against the company by issuing court proceedings and obtaining judgment.
- Under section 248 of the Companies Act 1993 a person cannot commence court proceedings against a company after the commencement of liquidation without leave of the Court or the liquidator’s consent. A failure to challenge a liquidator’s rejection of a claim, while relevant to the question of leave, is not fatal.
- The factors that the Court will consider in deciding whether to grant leave are:
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- The onus is on the party seeking leave to satisfy the Court that leave should be given;
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- There must be equality among various creditors, and the bringing of proceedings should not produce a comparative advantage to any particular creditor;
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- The assets of a company should not be dissipated in wasteful litigation, particularly if there is a more convenient method for determining the claim;
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- The Court will not examine the merits of the case but it must be satisfied that the proposed claim is not clearly unsustainable;
- Whether the proceedings are likely to be fruitless, even if successful; and
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- Whether there has been any delay in bringing the proceedings.
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