Administration - Immunity from suit - Move from administration to liquidation
In the matter of Globespan Airways Limited (formerly in administration and now in liquidation); in the matter of the Insolvency Act 1986: CA (Civ Div): 24 August 2012
The proceedings concerned a company (the company) which had been placed in administration by court order on 17 December 2009.
The effect of the timing of the administration was that the claimant administrators’ term of office terminated on 17 December 2010, pursuant to the terms of paragraph 76 of schedule B1 to the Insolvency Act 1986. Towards the end of the 12-month period of administration, the claimants wished to convert the administration into a creditors’ voluntary liquidation (CVL). On 13 December 2010, the claimants signed a conversion notice in the form prescribed by paragraph 83 of schedule B1 to the act.
However, the conversion notice failed to comply with certain requirements and was rejected by the defendant registrar of companies (the registrar). On 4 February 2011, the registrar finally registered a conversion notice filed by the claimants. However, by the application of paragraph 76 of schedule B1 to the act, by that date, the claimants had ceased to hold office as administrators. The claimants issued proceedings seeking directions as to whether and, if so when, registration of the conversion had taken effect. It was accepted before the judge that the first conversion notice had in fact been valid in law, however it had not been registered by the registrar.
The claimants submitted that the conversion of the company into a CVL took effect by the giving of notice by way of conversion notice to the registrar, namely 13 December 2010, but that, if that was wrong, the effect of registration by the registrar on 4 February 2011 had the effect of extending the claimants’ term of office as administrators of the company. The judge found that conversion had taken effect from the date of filing the first conversion notice, namely 13 December 2010. Although not having to decide the point, the judge rejected the claimants’ submission that the later registration by the registrar had the effect of extending the claimant’s term of office on the ground that the legislature had provided, by paragraph 76 of schedule B1 to the act, restrictions on the extension of the term of office of administrators. The registrar appealed.
The issues for determination were, first, whether, as the judge held, an administrator was able to convert the administration of a company into a CVL simply by giving notice in a conversion notice to the registrar. Second, whether paragraph 83 of schedule B1 had the effect of extending the appointment of an administrator. The appeal would be allowed.
A conversion notice took effect when it was registered by the registrar, and the conversion trigger date was thus the date of registration of the conversion notice (see , ,  of the judgment). The natural meaning of paragraph 83(4) of schedule B1 to the act was that a conversion notice did not take effect until it was actually registered. Paragraph 83 of schedule B1 to the act should be interpreted with a view to achieving its statutory objectives, which included achieving a streamlined conversion from an administration into a CVL.
The statutory objectives of the streamlined conversion route for exiting administration were achieved by an interpretation which gave paragraphs 83(4) and 83(6) of schedule B1 to the act their ordinary meaning. The ordinary meaning of paragraph 83(4) of schedule B1 to the act avoided a gap between the liquidator’s appointment and publication of it on the company’s file at Companies House and in the London Gazette. Further, the time at which the registrar was to register the conversion notice was defined by his or her public law duties, and before a conversion notice was registered, the registrar would perform some element of checking the information given to improve the accuracy of the register. Thus, an interpretation that allowed that checking to take place before conversion occurred would be preferred (see , - of the judgment).
Accordingly, in the instant case, the conversion trigger for the company would be determined as the date when actual registration occurred, which had been 4 February 2011 (see ,  of the judgment). An administrator was able to file a conversion notice even though he would cease to be an administrator before the notice took effect. The administrator’s term of office was, in general, automatically extended if a conversion notice under paragraph 83 of schedule B1 to the act was duly filed (see ,  of the judgment).
Paragraph 76(1) of schedule B1 to the act was not a complete code for establishing the date on which an administrator ceased to hold office. Further, paragraphs 76 and 83 of schedule B1 to the act were dealing with different subject matter and the achievement of the different statutory purpose of paragraph 83 of schedule B1 was dependent on the extension of the administrator’s term of office, whereas paragraph 76 of schedule B1 to the act was laying down general rules about cessation and extension of an administrator’s term of office.
Paragraph 83 of schedule B1 was dealing with the specific case of conversion of an administration into a CVL. Accordingly, an administrator’s term of office was, by implication from the words of paragraph 83(6) of schedule B1 to the act extended by filing a conversion notice from the date on which it would otherwise have expired by effluxion of time until paragraph 83(6) of schedule B1 to the act came into effect on registration of the conversion notice (see , ,  of the judgment).
Accordingly, in the instant case, the term of office of the claimants was extended until the date of registration of the conversion notice, namely 4 February 2011 (see  of the judgment). Decision of Briggs J  2 All ER 1234;  All ER (D) 54 (May) reversed.
Adam Goodison (instructed by Dundas & Wilson) for the claimants; James Eadie QC and David Lowe (instructed by the Treasury Solicitor) for the registrar.