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The appeal stems from a winding-up petition filed in the High Court by the respondents seeking an order to commence winding-up proceedings as well as the appointment of a liquidator in respect of the appellant, Livingstone Motor Assemblers Limited. The latter was heavily indebted to several creditors, including the respondents and the Zambia National Commercial Bank (ZANACO) which had commenced receivership proceedings and appointed a receiver/manager extra judiciously, prior to the High Court granting the winding-up order. Disgruntled by the grant of the order, the receiver/manager made an application to vary it so that only he would retain possession of the appellant’s assets for purposes of discharging his functions as receiver/manager in favour of the bank.

That application thus culminated in an appeal lodged in the Supreme Court to review a ruling passed by the High Court sometime in October 1995, to the effect that the making of a winding-up order in respect of a company already undergoing receivership, “does not vest the company’s assets under his custody and control to the exclusion of the liquidator who is in fact the legally authorized person to administer the affairs of a wound up company.”

The Supreme Court in this case had an opportunity to review the High Court’s order which was at the heart of contention in this matter. Simply put, who between the two external managers superintending over two varying insolvency proceedings, should have preferential custody and control of the company’s assets? The court thus held that where a company is undergoing receivership and liquidation simultaneously, the receiver shall have primary custody and control of all the charged assets, deal with the same to the satisfaction of the debt owed to his secured creditor and surrender the residue of the assets (if any) to the liquidator for the benefit of the unsecured creditors.