Skip to content

Other Avenues for Creditors

Other avenues for creditors:

  1. 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.
  1. 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.
  1. The factors that the Court will consider in deciding whether to grant leave are:
      • The onus is on the party seeking leave to satisfy the Court that leave should be given;
      • There must be equality among various creditors, and the bringing of proceedings should not produce a comparative advantage to any particular creditor;
      • The assets of a company should not be dissipated in wasteful litigation, particularly if there is a more convenient method for determining the claim;
      • 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
      • Whether there has been any delay in bringing the proceedings.

Any questions? Get in touch today.

Back To Top