Companies Act 2014 section 606

Restriction of rights of creditor as to execution or attachment in case of company being wound up

Section 606 restricts the rights of a creditor who has taken enforcement action (such as execution against assets or attachment of debts) against a company that is subsequently wound up, ensuring that unsecured creditors are treated equally in liquidation.

• A creditor who has issued execution against a company's assets or attached a debt owed to the company cannot retain the benefit of that action against the liquidator unless the execution or attachment was fully completed before the winding up commenced
• If the creditor was aware of a meeting at which a voluntary winding-up resolution was to be proposed, the date of that notice replaces the formal commencement date of the winding up for the purposes of assessing whether the execution was completed in time
• A person who purchases goods in good faith from a sheriff's sale will always acquire a valid title to those goods, even against the liquidator
• The court has discretion to set aside the liquidator's rights under this section in favour of the creditor, to the extent and on whatever terms it considers appropriate