The High Court ruled that both a bank and the parent company of Worldport Ireland Limited were disponees of a €256,044.44 transfer made after the company’s winding-up was deemed to begin. The court found the payment fell within section 218 of the Companies Act 1963, but did not decide whether to validate it.
The winding-up petition was presented on 15 April 2002, the date the parties accepted as the start of the winding-up for the purposes of the Companies Acts. On 22 April, the company’s records showed a transfer from its credit account with ABN Amro Bank N.V. to Worldport Communications Inc., its parent. Inc. accepted that it received the money; the account had enough funds to cover the payment.
The official liquidator sought a declaration that the payment was a void disposition under section 218, which provides that dispositions of a company’s property after the commencement of a court winding-up are void unless the court orders otherwise. The dispute before Mr Justice Clarke was whether the bank, Inc., or both should be regarded as recipients of the disposition.
Inc. argued that any disposition was in favour of the bank, because the transfer reduced the bank’s debt to the company. The bank and the liquidator also argued that Inc. was a disponee. The judge followed an earlier High Court decision, Re Industrial Services Limited, which treated a bank as a disponee in similar circumstances. He said judicial comity weighed against revisiting that recent ruling and noted that the bank had conceded that, under its reasoning, it fell within section 218.
The judge also found that Inc. was a disponee. He said the transaction had to be considered as a whole: the company’s claim to money held by the bank fell by the amount transferred, while its obligation to Inc. was reduced by the same amount. The payment depended on the company’s instruction to the bank, and could not be split into separate, independent transactions.
The court did not decide whether the transfer should be validated under the section’s “unless the court otherwise orders” provision. The parties had agreed to leave that issue for further consideration after the identities of the disponees were determined. The judgment therefore addressed who fell within section 218, not the final validity of the transaction or its effect on the company’s ultimate distribution of assets.