Globespan Airways Ltd (formerly (in Administration) and now (in Liquidation)) between Cartwight and Another v Registrar of Companies
| Jurisdiction | England & Wales |
| Judge | Mr Justice Briggs,MR JUSTICE BRIGGS |
| Judgment Date | 24 February 2012 |
| Neutral Citation | [2012] EWHC 359 (Ch) |
| Docket Number | Case No: 3567 OF 2009 |
| Court | Chancery Division |
| Date | 24 February 2012 |
[2012] EWHC 359 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
Mr Justice Briggs
Case No: 3567 OF 2009
In the Matter of Globespan Airways Limited (Formerly in Administration and Now in Liquidation)
In the Matter of the Insolvency Act 1986
Mr A Goodison (instructed by Dundas & Wilson LLP) for the Applicants
Ms L D'Cruz (instructed by Treasury Solicitor) for the Respondent
Hearing dates: 16 February 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This application by the former administrators of Globespan Airways Limited raises an interesting question as to the interpretation and application of paragraph 83 of Schedule B1 to the Insolvency Act 1986, headed "Moving from administration to creditors' voluntary liquidation".
Paragraph 83 provides a simple method whereby, by the sending to, and registration by, the Registrar of Companies of a notice in the prescribed form, a company may be moved from administration to a creditors' voluntary liquidation, so that the second of those insolvency processes immediately follows the first, without any gap between the two. Where such a gapless move is achieved, important consequences flow in respect of the conduct of the subsequent liquidation:
i) There is achieved a continuity in control of the company's affairs by officeholders whereas, during any gap between administration and liquidation, control would revert to any officers of the company who had not by then resigned.
ii) The relevant time (as defined) for the purposes of the provisions as to transactions at an undervalue and preferences (sections 238 and 239 of the Act) is, in relation to the liquidation, computed backwards from the date of the commencement of the administration rather than the liquidation: see section 240 (3) (d).
iii) The relevant date (as defined) for the determination of the existence and amount of a preferential debt is, in respect of the subsequent liquidation, to be the date when the company ended administration: see section 387 (3) (ba).
iv) The cut off date for the identification of provable debts for the purposes of the liquidation is to be the date upon which the company entered administration, but only if the liquidation was immediately preceded by an administration: see Rule 13.12 of the Insolvency Rules 1986, as amended by the Insolvency (Amendment) Rules 2010.
v) The relevant date for the calculation of interest is identified in the same way, but subject to the same condition that the liquidation was immediately preceded by an administration: see (following amendment in 2010) Rule 4.93 (A1).
With the possible exception of that identified in sub-paragraph (iii) above, none of those consequences follow if there is a gap between the conclusion of the administration and the commencement of the voluntary liquidation. The question thrown up by the unusual facts which underlie the present application is whether, in circumstances where a notice under paragraph 83 of Schedule B1 is both sent to and received by the Registrar before the termination of the relevant administration, but the administrative steps to bring about that registration occur only after the end of the administration, a gap thereby arises between administration and liquidation, with the unfortunate dis-application of the important provisions to which I have referred.
Paragraph 83
For present purposes the relevant provisions of paragraph 83 are as follows:
"(1) This paragraph applies in England and Wales where the administrator of a company thinks –
(a) that the total amount which each secured creditor of the company is likely to receive has been paid to him or set aside for him and,
(b) that a distribution will be made to unsecured creditors of the company (if there are any).
(3) The administrator may send to the registrar of companies a notice that this paragraph applies.
(4) On receipt of a notice under sub-paragraph (3) the registrar shall register it.
(5) If an administrator sends a notice under sub-paragraph (3) he shall as soon as reasonably practicable—
(a) file a copy of the notice with the court, and
(b) send a copy of the notice to each creditor of whose claim and address he is aware.
(6) On the registration of a notice under sub-paragraph (3) —
(a) the appointment of an administrator in respect of the company shall cease to have effect, and
(b) the company shall be wound up as if a resolution for voluntary winding up under section 84 were passed on the day on which the notice is registered.
In Re E Squared Ltd [2006] EWHC 532 (Ch), the facts were that administrators were appointed from 31 January 2005. On 27 January 2006 they sent a paragraph 83 notice to the Registrar, and it was received and date-stamped at the registry on 28 January, but not registered until 1 February, after the administrators' appointment had ceased to have effect. The issue for decision in that case was whether the notice was effective to bring about a creditors' voluntary liquidation of the company. David Richards J concluded that a paragraph 83 notice was effective to bring about a creditors' voluntary liquidation provided only that the administrators were still in office when they sent the notice. It mattered not that it was either received or acted upon by the Registrar after the administrators' period of office had come to an end.
David Richards J was not asked to, and did not, decide the question whether, in such circumstances, there was a gap between the end of the administration and the commencement of the liquidation. He mentioned, but without expressing any view about, the possibility that in such circumstances the effect of paragraph 83 might be to extend the administrators' period of office to a point coincident with the onset of the liquidation, in circumstances where it would otherwise have ended. He acknowledged, at paragraph 4, that paragraph 83 (6) envisaged that the company would pass from administration to liquidation without any hiatus and that there did not appear to be any acknowledgment within paragraph 83 as a whole that there might be a delay between the Registrar's receipt of a qualifying notice, and his registration of it. At paragraphs 6 and 13 he noted that there was nothing in paragraph 83 to suggest that, as a precaution against the adverse consequences of such a delay, administrators should be expected to send paragraph 83 notices significantly earlier than the end of their period of office (which, unless extended by court order made before the end of the period, is one year).
In the present case I have been asked to decide the 'gap problem' left unresolved by David Richards J in Re E Squared Limited. I have had the considerable benefit of hearing adversarial argument on the question between Mr Adam Goodison for the applicants and Ms Laura D'Cruz for the Registrar. Before addressing their helpful submissions, it is necessary to set out the (I hope) rather unusual but undisputed facts.
The Facts
Globespan Airways Ltd was placed in administration by court order with effect (after a further order varying the appointment date) from 17 December 2009. It was therefore due to end on 16 December 2010, no order for an extension having been sought or made.
On 13 December 2010 the joint administrators, John Bruce Cartwright, Graham Douglas Frost and Ian Christopher Oakley-Smith signed a notice in the form prescribed for by paragraph 83 (Form 2.34B) giving notice that paragraph 83(1) was to apply and that it was proposed that Mr Cartwright and Mr Oakley-Smith should be the liquidators of the company. That notice (which I shall call "the First Notice") was then hand-delivered to the Registrar on 14 December, and stamped as having been received on that date.
The guidance notes printed in the margin of Form 2.34B required the administrators to provide their names and addresses in section (a) and the names and addresses of the liquidators to be inserted in section (e). Each of the three administrators provided their full names and addresses in (a) but only the names of the two of them to be proposed liquidators in section (e); it being thought no doubt unnecessary to repeat their addresses.
On 16 December 2010 the Registrar rejected the First Notice by letter on the grounds that the notice was incomplete, since it lacked the liquidators' addresses in section (e). This letter of rejection reached the administrators only on 29 December, some 13 days after the end of their period of office.
On 6 January 2011 the administrators prepared and signed a fresh notice in Form 2.34B ("the Second Notice"). It differed from the first only in its date and in repeating the addresses of the then proposed liquidators in section (e). The Second Notice was received by the Registrar on 8 January.
On 13 January the Registrar wrote rejecting the Second Notice on the ground (which is now accepted to have been erroneous) that he had no record of the company ever having been in administration. The letter of rejection was received by the former administrators on 17 January and, on the same day, they sent an apparently identical further notice ("the Third Notice") to the Registrar, again dated 6 January, which was received by the Registrar on 19 January.
Finally, the Registrar registered the Third Notice on 4 February 2011. The searchable records at Companies House purport to show that the voluntary liquidation began on that day and also that the administration ended on that day, namely 4...
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Globespan Airways Ltd (formerly (in Administration) and now (in Liquidation)) between Cartwight and Another v Registrar of Companies
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