A single liquidator was initially appointed when a company resolved to enter members' voluntary liquidation on making the required declaration of solvency. Contrary to Section 84(2A) of the Insolvency Act 1986, no written notice of that resolution was given to a bank which held a floating charge over the company's assets.
It subsequently emerged that the company owed many millions of pounds to HM Revenue and Customs, and following a creditors' meeting, joint liquidators were appointed after the liquidation was converted into a creditors' voluntary liquidation. The earlier failure to comply with the statutory notice provision, however, gave rise to concern that the subsequent Liquidators had not been validly appointed.
The High Court noted that there was no dispute that the bank held a qualifying floating charge, within the meaning of Section 72(A) of the Act, and should have been notified of the liquidation proposals so that it could take its own advice.
In ruling that the original members' resolution and the successive appointments of liquidators were valid, however, the Court found that, when a resolution is passed to wind up a company, that resolution is valid notwithstanding any failure to give notice to a qualifying charge holder.
The bank may well have had a legal remedy if dissatisfied with the result. It could have petitioned for the compulsory winding up of the company or for a stay of the winding up so as to enable it to appoint an administrator. However, in the event, the bank had not objected to the creditors' voluntary liquidation or the liquidators' appointment.
If you have any issues surrounding your appointment as Liquidator or Administrator or have concerns about taking an appointment contact us for advice.
If you would like help on this or other related matter, please contact Leanne Schneider-Rose
 |
 |
 |
 |
 |
 |
|
