252

SECRETARIAL PRACTICE
s. 265 as to fraudulent preference (see above p. 248), and s. 266
must not be overlooked. By the latter section a floating
charge, given within six months before the commencement of
the winding up, is invalid except to the amount of any cash
paid to the company at the time of, or subsequently to the
creation of, and in consideration for, the charge, with interest
at 5 p.c. on that amount, unless it be proved that the company
was solvent immediately after the creation of the charge.
This the person claiming under the charge must prove. The
liquidator must carefully investigate the circumstances in
the event of his finding that such recent charges exist. If the
money is paid on account of the consideration for the charge
and in anticipation of its creation and in reliance on a promise
to execute it, it may be paid at the time of its creation within
the section, although the charge is not actually executed till
later unless the debenture holder has procured, or suggested,
or acquiesced in the delay [F. & E. Stanton, Ltd., (1929), 1 Ch.
180]. Although a charge given in the circumstances above
mentioned is declared invalid by the section, the instrument
creating it is not avoided altogther, and if the debt secured by
the charge has already been paid by the company it cannot be
recovered by the liquidator unless the payment is impeachable
as a fraudulent preference [re Parkes Garage (Swadlingcote)
(1929), 1 Ch. 139].
Assuming that the liquidator has at length ascertained the
extent of the company’s liabilities and of its assets, he will be
able to determine what further steps are necessary in the
winding up. If the assets exceed the liabilities and the costs
of winding up, he will be able to pay the debts and expenses
of winding up, and will then distribute any surplus assets
amongst the shareholders in accordance with their rights.
But if the company is insolvent, or if the liabilities, including
the costs of the liquidation, exceed the assets, it will be his
duty to increase the assets, if possible, by calling up the whole
or part of the unpaid capital. If the whole of the capital
is fully paid, no further sum can be raised from the share-
holders, except in cases where the articles of association of a
company provide for such further payments, e.g. in companies
limited by guarantee. But if the capital is not fully paid,
the duties of the liquidator as regards settling lists of contri-
butories and making calls must be undertaken.
Lists of Con- It must not be assumed that the liquidator will take no
tributories. steps towards settling the lists of contributories until he has
accurately ascertained the amount of both assets and liabili-
ties. In many cases he will be able to determine whether or
not calls upon the contributories will be required long before