Re Ballast Plc ((in Administration)) and Others

JurisdictionEngland & Wales
CourtChancery Division
JudgeThe Hon Mr Justice Blackburne,Mr Justice Blackburne
Judgment Date21 October 2004
Neutral Citation[2004] EWHC 2356 (Ch)
Docket NumberCase No: 6575 of 2003 6577 of 2003
Date21 October 2004

[2004] EWHC 2356 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

Before:

The Honourable Mr Justice Blackburne

Case No: 6575 of 2003

6576 of 2003

6577 of 2003

In the Matter of Ballast Plc (In Administration)
And in the Matter of Ballast Wiltshier Investments Ltd (In Administration)
And in the Matter of Wiltshier Facilities Management Ltd (In Administration)
And in the Matter of the Insolvency Act 1986

Richard Fisher (instructed by Taylor Wessing) for the Administrators

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.

The Hon Mr Justice Blackburne Mr Justice Blackburne

Introduction

1

These are applications by the joint administrators of Ballast plc (Ballast), Ballast Wiltshier Investments Ltd (Investments) and Wiltshier Facilities Management Ltd (Management). They are the same persons in each case. They seek orders under paragraphs 79, 85 and 98 of Schedule B1 to the Insolvency Act 1986 (the 1986 Act), with a view to taking advantage of the provisions contained in paragraphs 83 and 84 of Schedule B1, alternatively for directions pursuant to paragraph 63 of Schedule B1 "as to the appropriate manner in which to exit the administration".

2

All three companies entered administration under the new regime introduced by the Enterprise Act 2002 into Part II of the 1986 Act in place of the existing provisions of that Part. The new regime became effective from 15 September 2003. The three companies entered administration on 15 October 2003. They did so in each case by order of His Honour Judge Norris QC (sitting as a judge of the High Court) upon the application of the directors of the company in question pursuant to paragraph 12 of Schedule B1.

3

It is the wish of the joint administrators that Ballast and Investments move from administration to creditors' voluntary liquidation in accordance with the procedure available under paragraph 83 of Schedule B1 and that Management move from administration to dissolution in accordance with the procedure available under paragraph 84 of Schedule B1.

4

In this judgment, references to paragraphs are to paragraphs of Schedule B1 and references to sections are to sections of the 1986 Act.

5

One of the defects of the original Part II of the 1986 Act was (and, since the original Part II continues to apply to administrations which began prior to 15 September 2003, remains) the absence of any statutory procedure, equivalent to what is available in the case of a company in administration proceeding to a compulsory liquidation, enabling a company to move straight from administration to a creditors' voluntary liquidation. There may be important reasons why such a move is desirable, for example, the need or wish to preserve as "the onset of the insolvency" for the purposes of section 238 (transactions at an undervalue) or section 239 (preferences) the date when the company entered administration, or to ensure that the existence and amount of any preferential debts for the purpose of section 386 are ascertained as at the date that the company entered administration, rather than (in each example) the date when the company goes into voluntary liquidation. Under the old Part II procedures have been devised, some of them quite involved in nature, to overcome this omission in the statutory machinery so that creditors may have the benefit of a voluntary winding-up (which, on grounds of cost, creditors frequently prefer to the usually costlier compulsory winding-up) while not forfeiting the advantages (as set out in the examples above) that may accrue if, instead, the company moves straight from administration to a compulsory winding-up. See, for example, Re Norditrack (UK) Ltd [2000] 1WLR 343 andRe UCT (UK) Ltd [2001] 1WLR 436.

6

Paragraph 83 provides what the old Part II of the 1986 Act lacks, namely a simple mechanism for moving straight from administration to a creditors' voluntary liquidation. Together with amendments to provisions elsewhere in the 1986 Act, this new procedure enables the advantages described earlier to be preserved. (See, for example, 240(3)(d), concerned with the meaning of "onset of insolvency" for the purpose of establishing the "relevant date" in connection with transactions at an undervalue and preferences, and section 387(3)(ba), concerned with the ascertainment of the "relevant date" for the purpose of establishing the existence and amount of preferential debts.)

7

So far as material, paragraph 83 provides as follows:

"83(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).

83(3) The administrator may send to the registrar of companies a notice that this paragraph applies.

83(4) On receipt of a notice under sub-paragraph (3) the registrar shall register it.

83(5) If an administrator sends a notice under sub-paragraph (3) he shall as soon as is 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.

83(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.

83(7) The liquidator for the purposes of the winding up shall be -

(a) a person nominated by the creditors of the company in the prescribed manner and within the prescribed period, or

(b) if no person is nominated under paragraph (a), the administrator."

Paragraph 83(8) disapplies various provisions of the 1986 Act and modifies others so as, broadly, to adapt the provisions set out in the 1986 Act for placing a company in creditors' voluntary liquidation to the new method of bringing about a creditors' voluntary liquidation provided by the paragraph.

8

Paragraph 84 introduces a wholly new procedure which appears to some extent to mirror the early dissolution provisions contained in sections 202 to 203 (applicable to companies which are the subject of a compulsory winding-up order). In the circumstances set out in it, the paragraph enables a company in administration to move straight to a dissolution with a minimum of formality. The paragraph is as follows:

"84(1) If the administrator of a company thinks that the company has no property which might permit a distribution to its creditors, he shall send a notice to that effect to the registrar of companies.

84(2) The court may on the application of the administrator of a company disapply sub-paragraph (1) in respect of the company.

84(3) On receipt of a notice under sub-paragraph (1) the registrar shall register it.

84(4) On the registration of a notice in respect of a company under sub-paragraph (1) the appointment of an administrator of the company shall cease to have effect.

84(5) If an administrator sends a notice under sub-paragraph (1) he shall as soon as is 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.

84(6) At the end of the period of three months beginning with the date of registration of a notice in respect of a company under sub-paragraph (1) the company is deemed to be dissolved.

84(7) On an application in respect of a company by the administrator or another interested person the court may -

(a) extend the period specified in sub-paragraph (6),

(b) suspend that period, or

(c) disapply sub-paragraph (6).

84(8) Where an order is made under sub-paragraph (7) in respect of a company the administrator shall as soon as is reasonably practicable notify the registrar of companies.

84(9) An administrator commits an offence if he fails without reasonable excuse...

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5 cases
  • Re E Squared Ltd
    • United Kingdom
    • Chancery Division
    • 16 March 2006
    ...not have any effect. The particular circumstances of cases such as the present were not relevant for consideration by Blackburne J in Re Ballast Plc [2005] 1 WLR 1928 and nothing said by him in that case detracts, in my view, from this conclusion. 16 It must be acknowledged that, on other f......
  • Blair C. Nimmo And Gary S. Fraser Joint Administrators Of Station Properties (in Administration) For Directions
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    ...his power under para 80 to bring the administration to an end. In this regard I agree with the view of Blackburne J in Re Ballast plc [2005] BCC 96 where, in relation to analogous provisions, he stated (at para 15): "The decision whether to send such a notice rests entirely with the ad......
  • Re GHE Realisations Ltd ((in Administration))
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    ...route will not be open to the administrators. 18 The administrators' concern on the point is fully justified because in In re Ballast plc (in administration) and others [2005] 1 WLR 1928 Blackburne J, at paragraph 20, expressed the view that sense (ii) is the correct one. He said: "20.......
  • Re T M Kingdom Ltd (in admin.)
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    • Chancery Division
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