Statutory power - mergers and winding up:
It is usual to proceed under s.207 as there are technical difficulties over s.300 procedure. The liquidator's powers to reach a compromise with creditors are restricted to cases where all creditors (of the same class) are treated alike, e.g. a uniform payment of Shs.15 in 1 pound to be accepted in full settlement. But if their rights are to be varied a scheme of arrangement is required, i.e. s.207 is the correct procedure.
CASE: RE TRIX (1970)
A liquidator proposed to distribute assets to creditors otherwise than in accordance with their rights. He applied to the court under s.241 for its approval of the exercise of his statutory power of compromise.
He explained that a scheme of arrangement under s.207 would entail heavy expense which would deprive creditors of any advantage which that method might confer. Non-ascending creditors objected.
Held:
S.207 gives to creditors a right to state their objections to the court and the court may then in its discretion decide whether to approve the scheme. They would be unfair deprived of that opportunity under the more summary procedure of s.241. The liquidator's application for approval was rejected.