Seamless insolvency—a pipe dream? (Barclays Bank plc v Registrar of Companies)

Seamless insolvency—a pipe dream? (Barclays Bank plc v Registrar of Companies)

Examining the judgment in Barclays Bank Plc v Registrar of Companies, Matthew Weaver, a barrister at St Philips Chambers, observes that a ‘seamless insolvency’—while attractive in theory—may well be unachievable.

Original news

Barclays Bank plc (trading as Barclays Global Payment Acceptance) v Registrar of Companies and others [2015] EWHC 2806 (Ch)

The Chancery Division was asked to consider whether the former administrator of a company (Ms Sharma)—which was subsequently dissolved—was entitled to challenge the making of a restoration order made on the application of one of the company's creditors, who wished to obtain a winding-up order so that a liquidator could investigate payments made by the company prior to it entering into administration. A further question was whether the court could and should backdate the presentation of the winding-up petition to the date on which the company entered into administration.

On the facts of the case, it was held that Ms Sharma was entitled to challenge the making of the restoration order, but that her challenge would be unsuccessful. Further, a winding-up order was made, but would not be backdated.

Briefly, what were the facts of the case?

Client Connection Ltd (the company) was put into administration on 9 October 2012. The administrator (Ms Sharma) immediately effected a ‘pre-pack’ sale of the company’s claims book, resulting in a low return. Only 3.6 hours were spent by Ms Sharma investigating the company’s affairs. No details of the investigation or its outcome were disclosed to creditors. Ms Sharma then moved for a dissolution of the company, which occurred three months later. No liquidation ever took place.

In the meantime, Barclays Bank plc, a major creditor, had discovered that large sums of money had been paid out of the company which might be clawed back. It petitioned for the company to be restored to the register of companies and for its immediate winding-up, in order

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.