When can an office-holder seek directions from the court in insolvency proceedings?
When can an office-holder seek directions from the court in insolvency proceedings?

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • When can an office-holder seek directions from the court in insolvency proceedings?
  • The power to seek directions from the court
  • When may the power be exercised?
  • Which other parties may apply to the court for directions?
  • Procedure

The power to seek directions from the court

Office-holders in insolvency proceedings have statutory powers to seek directions from the court in relation to the performance of their duties. These powers derive from:

  1. section 112 of the Insolvency Act 1986 (IA 1986) in the case of voluntary liquidations

  2. IA 1986, s 168(3) in the case of compulsory liquidations (winding-up by the court)

  3. IA 1986, Sch B1, para 63 in the case of administrations (and special administrations—see Re Worldspreads Ltd (in special administration))

  4. IA 1986, s 303(2) in the case of bankruptcies

When may the power be exercised?

In the context of voluntary winding-up proceedings (whether a creditors’ voluntary liquidation (CVL) or a members’ voluntary liquidation (MVL)), IA 1986, s 112 provides that the power to seek directions from the court may be exercised to determine any question arising in the winding-up, or in respect of the enforcing of calls, to exercise all of any of the court’s powers which would be exercisable if the company were being wound up by the court. This suggests that the court in a voluntary liquidation may exercise any of the powers available to it in a compulsory liquidation.

It is not always necessary to have court involvement in voluntary liquidations, but it is sometimes beneficial and common to seek directions or a court order. The court will assist where is it satisfied

Popular documents