• Webb and Anor v Eversholt Rail Limited and Anor [2024] EWHC 2217 (Ch)

    It is not sufficient for an office-holder merely to assert that they are entitled to documents under the Insolvency Act 1986 without providing evidence of a reasonable requirement for those documents. Play This decision shows that while the Insolvency Act provides office-holders with broad powers to obtain documents and information for the purposes of investigating the company's affairs, the court will not grant an application that is unreasonably broad and unsubstantiated by evidence as to why the documents are reasonably required. The court was not persuaded that the application to court was necessary, as the Respondents had cooperated with focussed requests for documents. In fact, they had only resisted when the liquidators insisted that they should deliver up absolutely everything they held "in relation to" the company in liquidation. The court found that this was not the appropriate approach.

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    Bland and Anor v Keegan [2024] EWCA Civ 934

    How much reliance can an officeholder place on a members register? Can he or she assume that it is conclusive evidence of the record that details a company’s members? In this case, the Court of Appeal had to consider these questions when it looked at an earlier decision by a High Court judge who had determined that liquidators had been validly appointed. This determination was made despite the removal of the Appellant’s name from the register of members of the company, due to a fraudulently executed stock transfer form. The High Court had held that the register of members was conclusive as to the identity of the members of the Company at any particular point in time. This meant that a written resolution signed by the transferee, appointing joint liquidators, had been validly passed. The Court of Appeal needed to ascertain whether the High Court decision had been correct. To do so, it was necessary to look at whether the resolution passed by the company to place itself into voluntary liquidation was indeed valid. This point had to be considered due to the uncertainty as to who the members of the company were at the time the resolution was passed. This led to the court having to consider the status of an individual who has been fraudulently removed from the register of members of a company. Play The resolution in question was signed by the person who was shown as the holder of all the issued shares in the company in the register of members at the time. However, one half of those shares had only been registered in that person's name following her unauthorised execution of a stock transfer form in the name of Jeanette Keegan, the Appellant, who was the person who had previously been shown on the register of members as the holder of those shares. The trial judge had decided that, even if the stock transfer form were a forgery, the register of members was conclusive as to the identity of the members of the company at any particular point in time. Without more, that would have meant that the written resolution was valid and effective. However, the Appellant contended that the transfer of her shares, the entry on the register and the resolution for winding up and the appointment of the liquidators were all void and of no effect. This was then resisted by the Respondents who were appointed as liquidators by the resolution, and who had incurred considerable fees and expenses winding up the company before the liquidation was stayed whilst the validity of their appointment was resolved.

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    In Re a Company [2024] EWHC 1070 (Ch)

    Did enforcing foreign judgments by winding up just get easier? In this case, the court held that insolvency proceedings were not an "action on a judgment" for the purposes of section 24 of the Limitation Act 1980. This meant that they did not fall within the scope of the Limitation Act, and nor was there any common law limitation period. Play The importance of this judgment is that it brought the principles in Re Drelle v Servis-Terminal LLC (which also appears in this blog) into the wider corporate sphere. The issue of whether any limitation period would apply to prevent the presentation of a winding up petition based upon a foreign judgment was considered here. The present case was essentially an application to restrain presentation of a winding up petition on five grounds. These were: That the judgment debt was time-barred. That it was unclear if there had been an acknowledgment of the debt within the limitation period. That there was a substantial dispute as to whether the judgment debt had been satisfied. That the company was solvent. That it may be appropriate to grant an injunction. The High Court considered whether any limitation period applied to prevent the presentation of a winding up petition based upon a foreign judgment debt that was not subject to the judgment registration schemes under the Administration of Justice Act 1920 or the Foreign Judgments (Reciprocal Enforcement) Act 1933, and was not the subject of a Part 7 claim under the CPR. That would have converted the foreign debt into an English judgment debt. It confirmed the fact that a judgment can be the subject of a petition without such registration or recognition under the Administration of Justice Act 1920 or the Foreign Judgments (Reciprocal Enforcement) Act 1933. In the similar case of Drelle, which is referred to in this blog, whether it was necessary to first seek recognition of a foreign judgment under Part 7 CPR before issuing a bankruptcy petition which was founded upon it was also considered - but in that case the court looked at the similar position arising in the arena of personal insolvency. Crucially, in this case, the court held that the foreign judgment debt could serve as the basis for the presentation of the winding up petition as a matter of English common law. It also held that insolvency proceedings were not an "action on a judgment", so they were not within the scope of the Limitation Act 1980; and that there was no common law limitation period in any case. This meant that the avoidance of 'normal' limitation restrictions in relation to a winding-up petition was an important aspect of this case. The court also found that even if the Limitation Act had applied, the company had acknowledged the judgment debt through its agents within the six year period from the date of the final judgment. It also acknowledged that there was no substantial dispute of a nature which required evidence or hearing. However the court rejected a claim that a payment had been made in satisfaction of the judgment debt. The failure to pay the debt was seen as being of itself an act of insolvency, so the court noted that the underlying solvency of the Applicant was not relevant in this matter. As regards whether it was appropriate to grant an injunction, the court stated that it was likely that a stay in a foreign court, being procedural, would not, in and of itself, stop time running in the English and Welsh jurisdiction.

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    Re UKCloud Ltd (in liquidation) [2024] EWHC 1259 (Ch)

    Internet Protocol Addresses - fixed or floating charge? The question which arose in this case, and on which the liquidator required the court's direction, was whether the security granted by UKCloud Limited was a fixed charge or a floating charge. Play The reason that the liquidator felt he needed assistance on this question was probably because the label used in a debenture to describe the nature of the charge created over an asset, or class of assets, is a guide to the security the parties intended to create, but it is not conclusive. To attempt to answer this question, the court was fundamentally concerned with the nature of the rights and obligations the parties had intended to create. To come to a conclusion, it considered the essential difference between a fixed charge and a floating charge. The case law indicates that under a fixed charge the assets charged as security are permanently appropriated to the payment of the sum charged, in such a way as to give the chargee a proprietary interest in the assets. For as long as the fixed charge remains unredeemed, the assets can be realised from the charge, though only with the agreement of the chargee. The chargee might have good commercial reasons for agreeing to a partial release. Under a fixed charge, that will be a matter for the chargee to decide for itself. A floating charge contrasts with a fixed charge, however, because in the case of a floating charge the chargee does not have the same power to control the security for its own benefit. In this case, the chargee does have a proprietary interest, but its interest is in a fund of circulating capital. Unless and until the chargee intervenes (by crystallisation of the charge), it is for the trader, not the bank, to decide how to run its business.