Discharge of outstanding liability

If charged properties forming subject matter of sale under an arrangement under S.284 of the Companies Ordinance, 1984 included private properties of certain members, it did not vitiate the arrangement/agreement proposed by secured creditors

No requirement of law existed to the effect that only properties belonging to a debtor/customer company could constitute charged securities for its secured creditors

When the private members and sponsors of a company charged, mortgaged and encumbered their private assets for obtaining finance for the company, then such mortgaged, charged or encumbered assets could be sold validly to discharge the liabilities owed to the secured creditors.

Arrangement under S. 284 Companies Ordinance, 1984 proposing to sell charged assets that were either pledged, hypothecated or mortgaged to the secured creditors to cover finance availed by the company

In relation to the said charged assets, the secured creditors would be exclusive holders of security entitled to priority for payment and discharge through the realization of such assets.

In a case of creditors' arrangement, S. 284 of the Companies Ordinance, 1984 did not mandate that such an arrangement must enjoy the support of the management of the debtor company or any specific proportion of its membership

Role of members in a creditors' arrangement was to bring objections that disproved the bona fides or fairness of the scheme of the arrangement.

Preferential creditors could not override the interests and rights of the secured creditors.