Statements of Affairs

04/05/2021 1 By indiafreenotes

According to Sec. 454, within 21 days of the date of the winding-up order to the appointment of the official liquidator as provisional liquidator, the company has to submit a statement to the official liquidator as to the affairs of the company unless the Court otherwise orders. The statement must be in the prescribed form.

Procedure of Preparation of Statement of Affairs

For the preparation of Statement of Affairs, the following points are to be followed:

  1. First of all, take all assets which are not specifically pledged. These assets are taken at their realisable values. It may be noted that calls in arrears are also treated as an asset not specifically pledged to the extent of estimated realisable amount, but uncalled capital is not shown as an asset.
  2. Add to the realisable value of the assets not specifically pledged, any surplus from assets specifically pledged.
  3. From the total as obtained by adding (1) and (2) first deduct the amount of preferential creditors, then the amount of creditors having a floating charge (e.g., debentures) and the result will be surplus or deficiency as regards debenture holders.
  4. Deduct the amount of unsecured creditors from the figure as obtained in (3) above; the resultant figure will be either surplus or deficiency as regards unsecured creditors.
  5. Deduct the amount of paid-up share capital to the figure as obtained in (4) above; the result will be either surplus or deficiency as regards members or contributories.
  6. Any unrecorded assets or liability should be shown both in the Statement of Affairs and the Deficiency or Surplus Account to make double entry complete.

Verified by affidavit and must contain the following particulars:

(i) The assets of the company, stating separately the cash in hand and cash at bank and negotiable securities.

(ii) The debts and liabilities of the company;

(iii) Names and addresses of its creditors, stating separately the amount of secured and unsecured debts;

(iv) In the case of secured debts, particularly of the securities held by the creditors, their value and dates on which they were given;

(v) The debts due to the company and names and addresses of the persons from whom they are due and the amount likely to be realized;

(vi) Such further information as may be required by the official liquidator.

Lists to be Attached to the Statement of Affairs

Following lists are attached to the Statement of Affairs:

  • List A gives a complete list of assets not specifically pledged in favour of secured creditors. Creditors having a floating charge on the assets are considered as having assets not specifically pledged with them; so such assets are included in the list.
  • List B gives the list of assets which are specifically pledged in favour of fully secured and partly secured creditors.
  • List C gives the list of preferential creditors.
  • List D gives the list of debenture holders and other creditors having a floating charge on the assets.
  • List E gives the names, addresses and occupations of unsecured creditors and the amount due.
  • List F gives the names and number and value of shares held by various preference shareholders.
  • List G gives the names and holdings of equity shareholders.
  • List H shows how Deficiency or Surplus in the Statement of Affairs has been arrived at, i.e., it explains the reasons responsible for the surplus or deficiency. According to the law, the period covered by Deficiency or Surplus must commence on a date not less than 3 years before the winding up order, or if the company has not been incorporated for the whole of that period, the date of incorporation of the company, unless the official Liquidator otherwise agrees.