Getting the form wrong when converting from administration to voluntary liquidation

What happens if the notice to convert an administration into a voluntary liquidation (lodged during the period of administration) is rejected by the Registrar of Companies after the period of administration has expired? When does the period of administration expire? These were the issues in Re Property Professionals + Ltd [2013] EWHC 1903 (Ch), [2013] All ER (D) 110 (Jul).

What happened in the case?

The facts of the case are nothing unusual. In summary, the following happened:

  1. Property Professionals + Limited (the company) entered administration on 3 February 2010, where Mr Johnston and Mr Biddlecombe were appointed joint administrators of the company. The notice of appointment was timed at 2:13pm on 3 February 2010
  2. In 31 January 2011, the joint administrators sent to the Registrar of Companies Form 2.34B in order to move the company from administration to creditors' voluntary liquidation, pursuant to IA 1986, Sch B1, para 83 and to appoint themselves as joint liquidators•
  3. The Form 2.34B was received by the Registrar of Companies on 3 February 2011, by no later than 9:30am. That form was rejected by the Registrar of Companies on 8 February 2011 on the basis that the liquidators' addresses had not been included in the second part of the form. As the same individuals had been administrators, their names and addresses appeared in the first part of the form
  4. On 15 February 2011, Form 2.34B was sent back to the Registrar of Companies with the addresses of the liquidators completed in the second part of the form. This was received by the Registrar of Companies on 18 February 2013, no later than 9:30am, and was registered by him on 22 February 2011
  5. On 30 January 2013, at a meeting of creditors of the company (convened by Mr Johnston and Mr Biddlecombe as joint liquidators) the creditors resolved to appoint Mr Windatt and Mr Limb as joint liquidators of the company in place of Mr Johnston and Mr Biddlecombe

What issues did the court consider?

The issues the court looked at were:

  1. whether, for the Form 2.34B to be effective in order to convert the administration of the company to a creditors' voluntary liquidation, it was necessary for the administrators' appointment to be in force: (a) when Form 2.34B was sent or (b) when Form 2.34B was received or (c) when Form 2.34B was registered—in each case by the Registrar of Companies
  2. if the filing and registration of Form 2.34B was only effective if the administrators' appointment was in force when the Form 2.34B was received by the Registrar of Companies, then there is an issue as to whether the administrators' appointment made at 2:13pm on 3 February 2010 expired at midnight on 2 February 2011 or immediately prior to 2:13pm on 3 February 2010
  3. whether the Registrar of Companies was correct to reject the Form 2.34B sent to him on 31 January 2011. If he was not correct to do so, does this mean that the Form 2.34B registered by the Registrar of Companies on 22 February 2011 and sent to him on 15 February 2011 should be treated as if it was originally sent to him on 31 January 2011 and received on 3 February 2011?

What did the court say?

The court addressed each of these issues and looked at the case of Re Globespan Airways Ltd; Cartwright and another v Registrar of Companies [2012] 4 All ER 1124, decided by the Court of Appeal and which was very similar in fact, although the question for the court in Globespan was when the company had gone into liquidation (ie when Form 2.34B was filed or actually registered with the Registrar of Companies), rather than whether it had gone into liquidation. As set out by the Court of Appeal in Globespan, a company moves from administration to creditors' voluntary liquidation on the date Form 2.34B was registered by the Registrar of Companies and not the time the notice is filed at Companies House.

On the timing on when the period of administration actually ends, the question was considered in Globespan by Arden LJ. Arden LJ expressed the view that, in that case, the period of one year should be calculated with effect from the date and time from when the administration order was made and that the term of office would terminate just before the same time/date on the first anniversary. However, Purle J did note that this issue was not a central feature of Globespan and therefore the comments of Arden LJ on the point may technically be obiter. However, this would certainly appear to be the better view.

On the issue with the 'error' in Form 2.4B (which Purle J noted that there was no error/missing information; there was just no unnecessary repetition of information already set out in the form) and the effect of the period of administration in applying Globespan, Purle J held that there was an implied extension of the period of administration effected by the mere sending of the notice to the Registrar of Companies in order to ensure a seamless transition from administration to liquidation.

What should practitioners be mindful of?

Despite the comments by Purle J concerning the way in which Form 2.4B had been completed and the 'missing information' it is probably worth completing every section of a form, even where some information is duplicated, to ensure that the Registrar of Companies has no cause to reject the filing, irrespective of the implied extension of the period of administration. In addition, when filing Form 2.4B, practitioners should also file a notice of appointment of liquidator, as this is now required by Companies House as per its recent guidance notice.

 

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