Exit to liquidation after administration expires, despite delay in registration
The courts are willing to be pragmatic when interpreting the law on moving a company from administration to voluntary winding-up.
The court ruled that a statutory notice to convert from administration to liquidation was still effective even though the term of office of the administrator who served it had ceased by the time the notice was registered. The notice had been sent to the registrar four days before the administrator’s term of office had expired and was received and date-stamped the following day. The court decided that despite the administrator no longer being in office, the companies in question had been wound up on the date of registration of the relevant notice and the liquidators were its former administrators.
Because the statute assumes that the administrator should still be in office at the time of registration of the notice for it to be effective, the court looked at the question of whether the section was to be construed as requiring that the administrator should still be in office at the date of registration. If it were to be construed in this way, it would prevent administrators from using the full period of their appointment. They would have to allow sufficient time to accommodate possible delays in registering the notice. It might be reasonable to expect an administrator to allow sufficient time for delays in registration where he is seeking to extend his term, but not when he is intending to convert the administration into a voluntary winding-up under paragraph 83.
The decision continues the trend noted in our Law Now of 16 March 2006 “Extension of administration period”, on the TT Industries case. In that case, the court was willing to allow an application to extend the administrator’s term of office even though the application was not heard by the court until after the term of office had expired. The application had been filed before the term expired. Both these cases show the courts are striving to give full effect to the intended purpose of the new procedure.
Law: Re E Squared Ltd; Re Sussex Pharmaceutical Ltd [2006] All ER (D) 253 (Mar) [2006] EWHC 532 (Ch)16 March 2006; paragraph 83 of Schedule B1 Insolvency Act 1986 (as amended).
