Re E Squared Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE DAVID RICHARDS,Mr Justice David Richards |
| Judgment Date | 16 March 2006 |
| Neutral Citation | [2006] EWHC 532 (Ch) |
| Docket Number | Case No: 7569 OF 2004 and 321 OF 2006 |
| Court | Chancery Division |
| Date | 16 March 2006 |
[2006] EWHC 532 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice David Richards
Case No: 7569 OF 2004 and 321 OF 2006
Tina Kyriakides (instructed by Salans and Matthew Arnold & Baldwin) for the Applicants
Hearing date: 14 March 2006
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 Honourable
There are two applications before the court which raise the same issue, which is likely to arise in numerous other cases. Where administrators of a company have followed the statutory procedure for converting an administration into a creditors voluntary liquidation, but the notice sent by them to the registrar of companies is not registered by him until after the date on which the administration has ended, is the process nonetheless effective to put the company into liquidation?
One of the shortcomings of the statutory regime for administrations of insolvent companies, as it existed before the reforms introduced by the Enterprise Act 2002, was the lack of a simple procedure for converting an administration into a voluntary liquidation. The decisions in Re Powerstore (Trading) Ltd [1997] 1 WLR 1280 and Re Norditrack (UK) Ltd [2000] 1 WLR 341 provided practical solutions to some of the problems. The introduction of schedule B1 to the Insolvency Act 1986 setting out the new structure for administrations provided the opportunity to produce a simple process. This is contained in paragraph 83, which is headed "Moving from administration to creditors' voluntary liquidation". Omitting paragraph 83(2) which applies only to Scotland, sub-paragraphs 83(1) to 83(7) provide 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.
These provisions envisage a simple, seamless procedure. First, if paragraph 83(1) applies, the administrator may send the relevant notice to the registrar of companies. As soon as reasonably practicable he must also file a copy of the notice with the court and send a copy to each creditor whose claim and address is known to him. Secondly, "on receipt" of the notice, the registrar of companies must register it. It is registration which causes the appointment of the administrator to cease to have effect and the company to be wound up as if a resolution for winding up had been passed on the day of registration. The status of the date of registration as the operative date is underlined by provisions in paragraph 83(8)(b) and (e), substituting the beginning of the date of registration for the time of passing the resolution for voluntary winding up in sections 86 and 129 of the Insolvency Act 1986.
Paragraph 83(6) envisages that the company will pass from administration to winding up without any hiatus. Paragraph 83 does not, however, seem to envisage that there might be a delay by the registrar of companies in registering the notice after its receipt by him, so that, although sent and received before the administrator's appointment has automatically ceased to have effect under other provisions of the schedule, it is not registered by him until later.
Another of the reforms introduced into by schedule B1 was the imposition of tight limits on the duration of administrations. An administrator's...
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Globespan Airways Ltd (formerly (in Administration) and now (in Liquidation)) between Cartwight and Another v Registrar of Companies
...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. 5 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 ......