In the matter of Property Professionals & Ltd

The following points require decision:

The application before me has been brought by HSBC Merchant Services LLP, which is a creditor of the company, and has petitioned for a compulsory winding up should that course prove necessary. Both sets of insolvency practitioners have been joined as respondents but have played no active part in the application. The Registrar of Companies has also been joined as a respondent, and, whilst commenting by letter on some of the issues, has not appeared at the hearing.

The relevant background facts can be summarised quite shortly.

Mr Johnston and Mr Biddlecombe were appointed Joint Administrators of the company out of court on 3 February 2010 by the sole director of the company pursuant to Paragraph 22 of Schedule B1. The period of their appointment was due to expire 12 months later. The notice of appointment was timed at 2:13pm on 3 February 2010.

On 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 paragraph 83 of Schedule B1 and to appoint themselves as Joint Liquidators of the Company.

The form 2.34B was received by the Registrar of Companies on 3 February 2011, 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. There was no missing information therefore. There was just no unnecessary repetition.

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.

Some time later, 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.

Mr Rawlings correctly identified the following issues which needed to be addressed:

The leading authority in this area is the Court of Appeal decision in Re: Globespan Airways Limited [2013] 1 WLR 1122. The facts of that case have some similarities to the present case. The Form 2.34B was delivered to the Registrar of Companies before the appointment ceased, but was rejected by the Registrar of Companies because the Liquidators’ addresses were not set out, although they were the same people as the Administrators, whose addresses were given

Globespan was concerned principally with the question of when rather than whether the liquidation of the Company would commence pursuant to the filing of the Form 2.34B. At first instance Briggs J had found that the administration of the Company was converted into a creditors’ voluntary liquidation simply by filing the Form 2.34B with the Registrar of Companies rather than on the date upon which the Registrar of Companies actually registered it. The Court of Appeal however determined that the date upon which the administration of Globespan was converted to a creditors’ voluntary liquidation was the date upon which the Form 2.34B was registered by the Registrar of Companies.

Paragraph 83(3) of Schedule B1 provides that “the Administrator may send to the Registrar of Companies a notice that this paragraph applies”. Paragraph 83(4) continues: “on receipt of a notice under sub-paragraph (3) the Registrar shall register it”. Paragraph 83(6) provides that on registration of such a notice “(a) the appointment of an administrator in respect of the company shall cease to have effect, and (b) the company shall be wound up as if a resolution for voluntary winding up … were passed on the day on which the notice is registered”.

In Globespan, Briggs J at first instance had decided that the Registrar was wrong to reject the first form. There was no appeal from that part of his decision. Arden LJ (with whom the other two members of the Court of Appeal agreed) noted that the Registrar had been under a statutory obligation to register the first form 2.34B and that when he registered the later Form 2.34B he was fulfilling his obligation to register the first form which had been both sent and received whilst the Administrators were still in office. If that applies here, then the Registrar of Companies must be taken as having fulfilled his obligation to register the first form on 22 February 2011

In the present case also, the first form was sent while the Administrators were still in office, but were they in office when it was received, and what if they were not?

As mentioned, the form was received by the Registrar of Companies no later than 9:30am on 3 February 2011. The notice of appointment one year earlier was timed at 2:13pm on 3 February 2010.

Paragraph 76 of Schedule B1 provides: “the appointment of an Administrator shall cease to have effect at the end of the period of one year beginning with the date on which it takes effect”.

In Globespan at [26], Arden LJ expressed the view that in that case the period of one year should be calculated with effect from 10:00am on 17 December 2009 (when the administration order was made) and that the term of office would terminate just before 10:00am on 17 December 2010. Applying that to this case, the term of office terminated just before 2:13pm on 3 February 2011. The precise timing of the appointment in Globespan was not however of critical importance to the decision because in that case the Form 2.34B was initially filed on 14 December 2010, which was well in time. The comments of Arden LJ on the point may, therefore, technically be obiter. Be that as it may, her comments are of the highest order of persuasion, and I agree with them. I accordingly find that, as the Joint Administrators were still in office when the original Form 2.34B was both sent and received by the Registrar of Companies, the appointment of Joint Liquidators was effective from the date of subsequent registration. The case is in that respect on all fours with Globespan. It follows also from Globespan that the administration was impliedly extended to the moment of registration, so as to achieve a seamless transition from administration to liquidation.

There is another reason for reaching this conclusion. Even if I am wrong in my conclusion on the facts that the first Form 2.34B was received by the Registrar of Companies whilst the Joint Administrators were still in office, it was sufficient in my judgment for the Form to be completed and sent before the appointment was due to expire, even if the original appointment expired before receipt by the Registrar of Companies. That was the ruling of David Richards J in Re: E Squared Limited [2006] 2 BCLC 277, assuming (without deciding) that there was no implied extension by sending the notice. The Court of Appeal approved of this decision in Globespan. As, therefore, the form in this case was sent on 31 January to the Registrar of Companies, before the expiry of the appointment, that was sufficient by itself. The reasoning of Globespan would also indicate that, in this case also, there was an implied extension of the administration effected by the mere sending of the notice to the Registrar of Companies. That result was said in Globespan to follow by implication from paragraph 83(6) of Schedule B1, which applies in my judgment just as much to a notice received after the expiry date as it does to one received before.

It follows from this that the liquidation became effective, with Mr Johnston and Mr Biddlecombe as Joint Liquidators, on 18 February 2013. It also follows that the subsequent appointment of Mr Windatt and Mr Limb in their place in January 2013 was also effective, as the only basis for questioning their appointment can be that the company was not then in liquidation at all. I find that the company was then in liquidation and that the appointment of replacement liquidators was therefore valid.

I announced my decision following the conclusion of Mr Rawlings’ extremely helpful address. The busy state of my list did not enable me to give judgment straightaway, and I said I would give my reasons later. These are those reasons. I also gave permission to withdraw the winding-up petition, as the petitioners were not seeking to wind the company up compulsorily if the voluntary liquidation was effective. The petition was presented in case the company should be found not to be in liquidation at all.