York Gas Ltd (in Creditors” Voluntary Liquidation)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE NEWEY |
| Judgment Date | 29 July 2010 |
| Neutral Citation | [2010] EWHC 2275 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 1547/2010 |
| Date | 29 July 2010 |
[2010] EWHC 2275 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
COMPANIES COURT
Before: Mr Justice Newey
Case No: 1547/2010
Mr T Smith (instructed by Chadbourne & Parks) appeared on behalf of the Appellants
Approved Judgment
: I have before me an appeal from a decision of Registrar Nicholls dated 19 April 2010. The appellants, Mr Jacob and Mr White, are the liquidators of a company called York Gas Limited. Mr Jacob is a consultant with Grant Thornton UK LLP and Mr White is a partner in the same firm.
The background, in brief summary, is as follows. York Gas was part of the International Energy Group whose parent company was Independent Energy Holdings PLC (or “IEH”). The principal trading company in the group was Independent Energy UK Limited (or “IEUK”).
In September 2000, companies in the group went into administration and receivership. In 2002, IEUK and IEH went into creditors’ voluntary liquidation, and in the next year, York Gas followed suit. Mr Fishman and Mr Bailey of Ernst & Young LLP were appointed as liquidators of IEUK. The appellants became the liquidators of IEH and York Gas.
The statements of affairs for both IEH and York Gas show IEH as a creditor of York Gas. Hitherto, that inter-company claim has not been dealt with because, as Mr Jacob explained in a witness statement, the liquidators of IEUK have been undertaking a substantial reconciliation exercise in relation to dealings between companies within the group. However, that exercise is now, I gather, close to completion.
The appellants recognised that a conflict of interest arose with regard to IEH's claim against York Gas. Mr Jacob described the problem in the following terms in his witness statement:
“IEH has a claim in the liquidation of York Gas of £4,657,606 which presents a conflict of interest which may compromise the Joint Liquidators’ ability to act in the best interests of the creditors of York Gas. This is because, on the one hand, the Joint Liquidators as liquidators of IEH, have to assert this claim whilst, on the other hand, the joint liquidators as liquidators of York Gas will have to adjudicate the claim. In pursuing IEH's claim, the Joint Liquidators of York Gas would, as a consequence, be acting against the interests of the creditors of York Gas itself.”
The appellants sought to address this problem by applying for Mr Malcolm Shierson, a partner in Grant Thornton, to be appointed as an additional liquidator of York Gas. Mr Jacob explained his thinking as follows in his witness statement:
“In order to deal with the conflict of interest identified above, it is considered that the most effective and efficient course is for an additional office-holder to be appointed to York Gas. The new office-holder will be able to deal (from York Gas's perspective) with the incoming claim made by IEH and Mr White and I will be able to deal (from IEH's perspective) with its outgoing claim against York Gas.”
Mr Jacob went on to observe that it would be necessary for Mr Shierson to obtain independent legal advice to ensure that the rights of the creditors of York Gas were protected. He also said that “Chinese walls” would be put in place within Grant Thornton to ensure the independence of Mr Shierson and that separation of information was maintained.
It was the application for Mr Shierson to be appointed as an additional liquidator which came before Registrar Nicholls on 19 April. He dismissed the application.
In the course of his judgment, the Registrar said the following:
“Even taking into account that Mr Shierson would obtain independent legal advice, the court needs to be satisfied that the identified conflict of interest is addressed in such a way that this conflict does not cause, or appear to creditors to cause, prejudice to either company. Furthermore the court needs to be satisfied that the perception of a creditor of either company...
To continue reading
Request your trial
-
Jeremy Mark Willmont and Michael Finch (as Joint Liquidators of Webinvest Ltd) and Another v Mikhail Shlosberg
...have to be made can be addressed in the way indicated by Lord Hoffman, and more recently by Newey J in Re York Gas Ltd (in liq.) [2010] EWHC 2275 (Ch), [2011] BCC 447." 48 The potential for conflict exists where an issue arises as between the two estates, and does so because of duties owed ......
-
Global Fidelity Bank Ltd (in Voluntary Liquidation)
...considered. (22) West Mercia Safetywear Ltd. v. Dodds, [1998] BCLC 250; [1988] BCC 30, referred to. (23) York Gas Ltd., Re, [2010] EWHC 2275 (Ch); [2011] BCC 447, referred to. (24) Zinc Hotels (Holdings) Ltd. v. Beveridge, [2018] EWHC 1936 (Ch), considered. Legislation construed......
-
The Companies Act (2021 Revision) Global Fidelity Bank, Ltd (in Voluntary Liquidation)
...a Manx judicial wig as First Deemster and Clerk of the Rolls, I applied the first instance English authority of Re York Gas Ltd [2010] EWHC 2275 (Ch) in respect of the appointment of “conflict liquidators” and also referred to Parmalat Capital Finance Ltd v Food Holdings Ltd (in liquidatio......