The Supreme Court on Monday allowed an unusual application for a winding up petition from the directors of the Bermuda Workers Cooperative Society (BWCS), the owners of the defunct Co-Op Supermarket.

And in the process, the directors obtained some breathing space from pressing creditors, who have already filed writs against them seeking hundreds of thousands of dollars.

Because a society is virtually an unknown species in law, lawyer for the BWCS, Delroy Duncan of Trott & Duncan, had to rely on an obscure case dealing with the winding up of an unincorporated association. Mr. Duncan said, "I think it was the only case in the law reports, a 1972 case, which said that the court has an inherent jurisdiction to wind up a society whose organisation is unknown to law. It has no structure. "This one is not a company, a friendly society, a credit union or a club. And it is not a partnership because it is too big. You can't have a 1,200 person partnership. In England, it would be unlawful because under section 718 of the 1985 Companies Act, you can't have an unregistered company with more than 20 persons.

"The petition was accepted because of the court's inherent jurisdiction and I relied on that, so that the court can just adopt its own procedure in winding up a body that has no rules to fit it, and there is no law to apply to it.'' Wind-up petition allowed Mr. Duncan obtained from Chief Justice Austin Ward a stay of the previous proceedings, involving writs that had been taken out against the directors by creditors that included the supermarket's importers.

BDC, Butterfield & Vallis and Winter Cookson Petty were represented in court by Andrew Martin of Mello, Hollis, Jones & Martin. The latest writ against the company was filed this month by the Island Press. Any legal action must now be channelled through the official receiver, the Registrar of Companies, who will administer the affairs of the society.

Mr. Duncan was asked if the members had effectively dodged liability for the society's debts. He said that creditors would now have to go through the official receiver.

He said, "The receiver will have powers to bring actions and to defend them, if necessary.'' He said that it was hoped that a resolution could be found that would resolve the issue before creditors sought to press the issue with the directors.

He said, "Hopefully, something could be put in place whereby some money can be used to satisfy some of the debt. That is a hope. There is no evidence that that is going to take place.

"The space is still vacant. It is a well known space for supermarket activity. If something was put in its place, the members hope that potential profits that might be generated from whatever new business was created, could be used to work off some of the debt. One can't guarantee it. Certainly, one can't bind anyone's hand in the future to that, but that is the hope I certainly have. It is up to the official receiver, now to decide what he wants to do.'' Mr. Duncan said the shareholders were unable to incorporate a limited liability company when they established the Co-Op, because under the Companies Act, if the word "co-operative'' is in the name of an association, it can not be a company. He said, "They could have changed the wording in the name or changed their object, so that they were not operating for gain, but redistributing the monies back into the society, somehow. Then it could have been a friendly society.'' The supermarket closed in October, after two years of being on the brink of insolvency.

Delroy Duncan BUSINESS BUC