Companies Act 2014 section 616

Rescission of certain contracts and provisions supplemental to section 615

Section 616 deals with the court's power to cancel contracts involving a company in liquidation and to deal with property that has been disclaimed by the liquidator under section 615.

• The court may rescind a contract made with a company in liquidation on application by any party affected, awarding fair compensation treated as a proved debt in the winding up
• Where property has been disclaimed under section 615, the court may order it to be transferred to any person with a legitimate claim or liability, without the need for a separate conveyance or assignment
• For disclaimed leasehold property, the court will only vest it in a person claiming under the company (such as a sub-tenant or mortgagee) if that person accepts the original lease obligations — refusal means forfeiting all interest in the property
• If no one claiming under the company will accept those lease terms, the court may vest the property in any person personally liable to perform the lease covenants, freed from encumbrances created by the company

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