Administration – dissolution – restoration – procedure – retrospective winding up – s.1029, s.1032 Companies Act 2006 – Companies Court Practice Note (12 November 2012)
A bank, as creditor of a dissolved company, sought restoration to the register and winding up to enable investigation into certain transactions. An order backdating the winding up was sought. The company’s former administrator had achieved no return to creditors and not reported to them on her investigations. She applied to rescind the order for restoration made prior to her joinder, and opposed the orders sought.
The Judge held that the correct procedure had been followed, as set out in the Companies Court Practice Note (12 November 2012), no notice of the application being required to be given to the former administrator, directors or shareholders. Although it would be unusual for a former administrator to have standing, unusually in this case, where her conduct was criticised and was relevant to the identity of any liquidator to be appointed, she had locus. Her challenge to the restoration should have been by appeal not under r. 7.47 Insolvency Rules 1986. On the facts, the conduct of the Bank prior to dissolution did not amount to an “election” such that restoration would be unjust. In general, other than “blatant fishing expeditions” restoration may be justified by investigations into transactions which credible evidence establishes merit examination, even if at the restoration date it cannot be demonstrated that assets are likely to be recovered.
Once an insolvent company is restored some mechanism for eventual dissolution is required and a winding up order was therefore appropriate. There was jurisdiction under section 1030(3) of the Companies Act 2006 to deem a petition to restore and wind up to have been presented at an earlier date, but not before dissolution. Whether a seamless insolvency for the purposes of e.g. sections 238 and 239 of the Insolvency Act 1986 would thereby be achieved would need to be argued in another case. On the facts, the jurisdiction would not be exercised: notice to affected persons had not been given and evidence regarding the timing of the Bank’s application was inadequate.
Restoration of an insolvent company for the purposes of carrying out a relevant investigation may be ordered. It is not necessary to demonstrate assets will be recovered. In the context of restoration, a winding up may, in effect, be backdated with a view to preserving the “end date” for calculating the period within which transactions may be challenged under the Insolvency Act. However, the efficacy of such orders has yet to be tested.
