Barclays Bank Plc (t/a Barclays Global Payment Acceptance) v The Registrar of Companies & Ors

The question to be answered in this case is what steps (if any) are open to a creditor to get in additional assets belonging to a dissolved company that was formerly in administration. In particular is it open to the creditor (a) to restore the company to the register (b) then to seek a winding up order and (c) as part of that application to ask for the winding up petition to be treated as presented as at some earlier date?

Client Connection Limited (“the Company”) was incorporated in July 2008. Its two directors were Ryan Stanton and Norman Stanton. The business of the Company was the claims management of PPI claims: it traded under the names “Life Style Claims” and “Money Claiming Experts”. Its business model was to canvass potential clients by telephone, assess over the phone whether they might have a PPI claim, obtain the clients’ verbal agreement to allow the Company to handle the claim on a “no win, no fee” basis and then (notwithstanding that agreement) to charge an “upfront fee” of £359.00 (irrespective of the amount of the claim itself).

This “upfront fee” would generally be paid by credit card. In the event that the client was dissatisfied with the service provided or in the event that the claim failed the client would seek repayment of the “upfront fee”. This claim was generally made against the card issuer (not the Company) and if allowed was then the subject of a “chargeback” by the card issuer to the Company. Originally about 40% of the claims managed by the Company failed, so the volume of “chargebacks” was already fairly high. The volume increased when (as a result of challenges to the claims management industry and of the Ministry of Justice making a regulation which forbade the collection of “upfront fees”) the business of the company stumbled, its service deteriorated and the number of dissatisfied customers grew.

Because of the cash flow problems thereby generated the directors decided to put the company into administration. This they did on the 9 October 2012. They appointed Ms Gagen Dulari Sharma (“Ms Sharma”) of Sharma & Co as the administrator. The object of the administration was to achieve a better realisation for the creditors than if the Company had immediately gone into liquidation: and Ms Sharma assumed certain obligations in pursuing that objective.

First, by paragraph 3(2) of Schedule B1 of the Insolvency Act 1986 (“the 1986 Act”) Ms Sharma was obliged to perform her functions “in the interests of the company’s creditors as a whole”. Although she had been appointed by the directors, her duties lay towards the creditors.

Second, according to Statement of Insolvency Practice 2 (“SIP2”) she undertook obligations to conduct investigations into the Company’s affairs. As part of her initial assessment her professional obligations required her to do the following:-

“9.

Notwithstanding any shortage of funds, an office holder should consider the information acquired in the course of appraising and realising the business and assets of a company together with any information provided by creditors or gained from other sources, and decide whether any further information is required or appropriate. The office holder should make enquiries of the directors… by sending questionnaires and/or interviewing them…

10.

In every case, an office holder should make an initial assessment of whether there could be any matters that might lead to recoveries for the estate and what further investigations may be appropriate.

11.

An office holder should determine the extent of the investigations in the circumstances of each case, taking account of the public interest, potential recoveries, the funds likely to be available to fund an investigation, and the costs involved.

12.

An office holder may conclude that there are matters (for example, the conduct of management, prior transactions susceptible to challenge…) that require early investigation, either as a matter of public policy or because there are real prospects of recoveries for the estate. It is for the office holder to decide whether investigation and subsequent legal action should proceed as quickly as possible, without consultation with or sanction by creditors…”.

Upon taking office Ms Sharma immediately that day effected a “pre-pack” sale of the Company’s ongoing claims book and of its modest goodwill to Redhawk Legal Limited (an unconnected party) for a small premium and a deferred consideration of 10% of the claim values. Any continuing liability under this provision was later commuted to a single payment of £1000. Only 62p was collected by way of realisation of the Company’s book debts. Total realisations were £70,000. Ms Sharma’s fees and disbursements as administrator amounted (as billed) to £141,000.00. There was therefore no return at all for the 2683 creditors with claims totalling £3.196m.

In her initial proposals to the creditors Ms Sharma explained:-

“My investigations into the affairs of the Company and the events leading up to my appointment are still at an early stage and I will report my conclusions to the appropriate bodies in due course. In the meantime if creditors have any specific matters regarding the running of the Company and/or the conduct of its directors that they feel warrant investigation please provide full details in writing.”

In fact as at the date of proposal it appears that Ms Sharma had expended no chargeable time at all upon investigations.

In her progress report to the Creditors for the period 9 October 2012 to 8 April 2013 Ms Sharma reported:-

“Investigations have been completed into the failure of the Company as required by Statement of Insolvency Practice 2”

She told creditors that she had reported upon the director’s conduct but that as the report was confidential she could not disclose its contents. The entire investigation process had taken 3.6 hours of the time of a senior professional, for which a time cost charge of £990.00 was made.

It is apparent from her final report (undated but probably issued on 23 September 2013) that the investigations for which she had charged for 3.6 hours of time covered the SIP 2 review, the CDDA reports and an investigation of “antecedent transactions”. In her final report Ms Sharma said that no further realisations were anticipated in the administration in respect of the sale or otherwise, and that as there were insufficient realisations to make any distribution to unsecured creditors she proposed to move from administration to dissolution of the Company under paragraph 84(1) of Schedule B1 to the 1986 Act. It appears that notice of that intention was registered by the Registrar of Companies on 26 September 2013: and that the Company was dissolved on the 26 December 2013 by the operation of paragraph 84(6) of Schedule B1.

In none of her reports to creditors had Ms Sharma given any details of any of the investigations which she had undertaken or of their outcome. It is not possible to be confident that Ms Sharma got to the bottom of events so that she could explain to the creditors why they were getting nothing in respect of their debts.

The most significant creditor in the insolvency was Barclays Bank Plc which had a claim of just over £2m in respect of “chargebacks” due to it. Barclays thought that there were certain transactions which required investigation. These were summarised in a letter dated the 12 September 2014 (9 months after dissolution) sent by Mr Wood of Grant Thornton to Barclays by way of advice. His advice was based on a consideration of “the trial balance provided along with the Statement of Affairs by the former administrator”, a reference to a document and attachment prepared by Ryan Stanton on the 23 October 2012 (after the commencement of the administration). From this material it seemed to Mr Wood that a lot of money had gone out of the Company which could potentially be clawed back for the benefit of its creditors. He identified four transactions which he thought required further investigation:-

Grant Thornton’s letter of the 12 September 2014 was not the first that Barclays knew of some of the transactions referred to. Indeed as early as the 22 October 2012 (within days of the commencement of the administration) dealings between the Company and Cellcom had been raised by Barclays at a meeting with Ms Sharma. It was suggested by Barclays that the Company outsourced its claims handling to Cellcom and was continuing to do so immediately before the administration commenced, and Ms Sharma confirmed that she would investigate all such transactions since the 7 September 2012 along with details of any claims that had been passed to third parties and any connected party transactions. I have summarised her investigations and reports to creditors. It is the evidence of Mr David Owen (a specialist risk manager at Barclays with responsibility for the Company’s account) that whilst Barclays itself undertook enquiries during the course of Ms Sharma’s term of office those enquiries were not concluded until after the time at which the Company was dissolved. But he does not say what those enquiries were, nor does he summarise their results.

On the 15 January 2015 Barclays presented a petition seeking the restoration of the Company to the register and for its immediate winding up. It conducted that application in accordance with the current practice set out in the Companies Court Practice Note dated 12 November 2012 issued by Chief Registrar Baister. It did not inform Ms Sharma as a former office holder of the making of the application, nor did it inform the former directors of and former shareholders in Company. The Practice Note does not so require.

The petition sought additional unspecified relief. The evidence in support of the petition made clear that this related to the pursuit by the liquidator (if appointed) of “claims” so that further sums could be recovered and distributed to all of the creditors. On the 10 March 2015 District Judge Troy made an order restoring the Company to the register: but he adjourned the other relief which Barclays sought until after Ms Sharma had been given notice of the application. That further relief together with an application by Ms Sharma is what I must rule on.

The matters for determination are:

The first question to be answered is: what standing does Ms Sharma have as a former administrator to seek any relief? Ms Sharma has not sought to intervene in this action as a former officer of the Court who wishes to report to the Court upon matters not covered in her interim and final report to creditors and otherwise to act in a neutral way. Ms Sharma actively opposes the relief which has been obtained. She has sought to demonstrate “serious and material deficiencies in the evidence presented to the Court”. She has accused Mr Wood of Grant Thornton of telling lies about her. In truth she has responded to what she perceives to be the possibility of a claim against herself or her firm in relation to the conduct of the administration, although she acknowledges that “that, of course, is not the way in which the Petition and the application before the Court have been put”: and she describes Barclays’ evidence (which makes reference (a) to criticisms of her performance as officeholder that were made by the judge in Top Brands v Sharma [2014] EWHC 2753 when ordering her to make a misfeasance payment of £350,000 plus interest and (b) to some of the submissions made in that case on her behalf as to what the consequences of making such an order against her would be) as “nothing less than an absolute disgrace”. The whole tenor of the evidence is to discourage the Court from permitting any enquiry by a liquidator into the Company’s dealings or into Ms Sharma’s investigation of them. Nor does she seek to intervene as creditor. In her evidence Ms Sharma does not rely on the fact that she is a creditor of the Company in respect of the unpaid balance of her billed administrator’s fees and disbursements.

Section 1029(1)(b) of the Companies Act 2006 (“the 2006 Act”) provides that an application may be made to the Court to restore to the register a company that is deemed to have been dissolved under paragraph 84(6) of Schedule B1 to the 1986 Act. Section 1029(2) goes on to list those by whom such an application may be made. Ms Sharma falls within category (i) as being “[a] person who was a creditor of the company at the time of its… dissolution”. But she does not rely upon that status in order to mount her present application. Her Counsel, Mr Doyle, submits that as former administrator Ms Sharma also falls within the general category with which the subsection concludes namely “[a] person appearing to the court to have an interest in the matter”.

I do not agree that a former administrator will automatically “appear” to the Court to have “an interest” in the matter of the restoration of a dissolved company: in general the “interests” of a former officeholder in the affairs of the company are extremely limited. But I accept Counsel’s submission that on the facts of this case Ms Sharma does have such an “interest”. The petitioner’s evidence makes plain that the petitioner is not satisfied with the way in which the administration was conducted, and considers that Ms Sharma should have investigated the dealings with Cellcom and the other matters referred to in Mr Wood’s letter of 12 September 2014 “but failed to do so”. The petitioner also explains why it is inviting the Court not to appoint Ms Sharma as the former officeholder to be the liquidator in the event of a winding up, and in the course of doing so draws to the Court’s attention criticisms that have been made of Ms Sharma by another judge and attempts to summarise what is believed to be her current professional position based on submissions made on her behalf. This evidence can only have been adduced because it was thought relevant to the matter of the restoration of the Company (which has been determined) and to the identity of any liquidator (which remains to be determined). If relevant, but either incomplete or inaccurate, Ms Sharma has an “interest” in supplementing or correcting this evidential material such that, had she been served with the application and evidence before the order for restoration had been made, she would have been entitled to appear at the hearing and assist the Court. (She has, of course, in fact provided no additional information about her investigations and has gone well beyond “assisting the Court” in an endeavour to defend her personal reputation and to forestall any claim by a liquidator on behalf of all creditors against her. But that does not affect her standing to participate in the restoration application, going rather to the costs consequences of her doing so).

I accordingly hold that Ms Sharma has standing to make an application in relation to the relief already granted and to intervene in the application as regards further relief.

In so holding I emphasise that I do not consider that she should have been joined to the application for restoration at the outset. The procedure contemplated in the Practice Note is to be followed, and it is a matter for the Court (having regard to the evidence of the applicant as to the true state of affairs) to decide whether any departure from the norm is warranted.

Having accorded Ms Sharma standing, the second question to be answered is whether there is jurisdiction to rescind District Judge Troy’s order for restoration. Rule 7.47 of the Insolvency Rules 1986 provides for a review by the Court of any order made in exercise of its insolvency jurisdiction under Parts 1 to 4 of the 1986 Act. The Order of District Judge Troy dated 10 March 2015 restoring the Company to the register was not made in exercise of the jurisdiction under the 1986 Act, but was expressed to be made in exercise of the jurisdiction conferred by section 1031(2) of the 2006 Act. The only decision made in exercise of the insolvency jurisdiction was to adjourn the petition, to direct service upon Ms Sharma and the former directors of the Company, and to lay down a timetable for their evidence. These are not orders which Ms Sharma seeks to review. In my judgment Rule 7.47 is of no assistance to Ms Sharma.

It would be unjust to dispose of her application on that ground (a) because the point was not taken by Counsel for the petitioner, Mr Fennell; and (b) because the source of the confusion is the petitioner’s decision to make the restoration application within a petition instead of within a Part 8 claim (and nobody has taken any procedural point upon that). So I will assume that Ms Sharma has appealed paragraph 1 of the Order of 10 March 2015 as someone adversely affected by it although not then a party to the proceedings (see paragraph 52.1.1.3 of the White Book). The hurdle to be surmounted is technically different from that under IR 7.47, but on the facts of this case not materially so. Accordingly, there is a jurisdiction to exercise.

The third question to be answered is: should the order for restoration be set-aside as erroneous in the circumstances? Counsel for Ms Sharma says that the restoration order ought to be set aside (a) as a matter of principle (b) because the evidence about Ms Sharma is incorrect and (c) because restoring the company to the register only has point if it can be wound up and in that winding-up additional assets can be recovered.

As to principle, Mr Doyle submits that the restoration of the Company is at odds with the Company having been moved into dissolution in accordance with the proposals approved by creditors in the administration of the company. I do not accept this submission. Restoring to the register a company which has been dissolved at the end of the administration is one of the specific circumstances contemplated by section 1029 itself. The only question in each case is whether “the court considers it just to do so”.

Further as to principle, Mr Doyle elaborated the submission by arguing that in the instant case Barclays had had a full opportunity to challenge the decisions of the administrator during the course of the administration and could have sought to remove Ms Sharma as administrator (under para. 88 of Schedule B1) or to seek directions (under para. 63 read with Re Mirror Group Holdings [1992] BCC 972 at 976G) or to challenge her conduct of the administration (under para. 74) and that having failed to avail itself of any of those remedies, but rather accepted her proposal to proceed to dissolution, it was wrong in principle to allow Barclays to apply to “restore and wind-up”.

I do not accept this submission either. Section 1029(1)(b) of the 2006 Act is not in terms confined to cases where a dissolved company is to be restored because fresh assets have been discovered which require to be dealt with: its scope is wide and I see no reason why the entirely general words of the section should be read restrictively. A creditor may, within the proper scope of the section, seek restoration of the company in order to pursue investigations which may or may not yield further assets, even if the creditor did not insist upon the administrator doing so. The only question in each case is whether “the court considers it just” to restore the company; and central to that consideration are the concerns of those with an economic interest in restoration.

There are undoubtedly cases in which those with a relevant economic interest have in effect “elected” during the course of the administration not to pursue a particular line of enquiry (as Mr Doyle put it), and to allow a change of mind after dissolution would unfairly prejudice some other party. The unreported decision of Oliver J in Dunkeswell Farm Ltd (1975) was just such a case. But that is plainly not this case. The administrator spent only a small amount of time investigating the matters drawn to her attention (it may in the event prove to have been sufficient) and she did not inform the creditors what those investigations were or what their outcome was. Such limited activity and absence of information cannot ground any sort of “election” (to apply a loose label covering positive choice, acquiescence and laches). Further, Barclays is not to be criticised if, at its own risk and expense, it undertook its own preliminary investigations rather than embroil all creditors in applications within the administration. Paragraph 11 of Mr Sullivan’s Third Witness Statement explains that applications within the administration were seen to be expensive, and also hazardous at a time when Barclays’ claim within the insolvency had not been accepted by Ms Sharma.

I hold that there is no reason in principle why restoration should not be granted on the application of Barclays.

As to evidence, Mr Doyle submits that the order for restoration was made on the basis of a less than full picture of the relevant circumstances, and now there is new material before the Court from which it appears that a restoration order ought not to be made.

I do not accept this submission. The object of the application to restore was plainly stated to be the need to undertake further enquiries. The justification for the application to restore was that Barclays was not satisfied with the way that the administration was conducted, and considered that Ms Sharma should have investigated certain matters. The explanation for not wanting Ms Sharma as liquidator was that Barclays lacked confidence she would conduct a thorough investigation (supported by judicial observations in the Top Brands case). After the order for restoration was made Barclays filed further evidence relating to the outstanding relief i.e. the claim to wind up, and the claim to have a liquidator other than Ms Sharma.

To obtain the order for restoration Barclays had only to persuade the Court that it was “just” to make the order. It did so by demonstrating (a) that limited investigations had been undertaken, the results of which had not been shared with the creditors; and (b) that respectable professional opinion (from Grant Thornton) considered there were four matters which warranted investigation in an attempt to recover assets for creditors. Ms Sharma’s evidence throws no further light on those matters. It instead focuses upon her personal position. Ms Sharma’s evidence establishes (and it should be acknowledged) (a) that she has appealed the judgment in Top Brands containing the very adverse assessment of her, the finding of misfeasance by her and the order that she pay £350,000 plus interest; and (b) that although through Counsel she told the judge in Top Brands that she faced financial ruin if any order for compensation were made against her, that has not proved the case, that both she and her firm remain in practice pending the determination of the appeal, and that Grant Thornton’s understanding that she had transferred all of her existing cases to another practitioner was incorrect.

But I hold that such “interest” as she had in informing the Court that the adverse Top Brands judgment was under appeal and that Grant Thornton’s assessment of her professional position was not accurate is of no significant weight in assessing whether it was just to restore the Company to the register. The protection that limited liability and the potential dissolution of the company affords to directors and those with whom they deal comes at the price of the insolvent company being exposed to reasonable examination by the creditors concerning its transactions: and in ordinary circumstances it is those with an economic interest in the potential assets of the restored company whose voices must prevail.

As for the submission that the only point of restoration is immediately to put the company into winding up and in that liquidation to recover further assets, and that the recovery of further assets is dependent on being able to “back date” the petition, I do not accept the submission in its entirety. I agree that in the instant case, because there is no immediately identifiable property to be vested in the restored company (other than its books documents and records), the object of restoration is immediately to put the company into winding up. But I do not agree that the winding up is justified only if it can be demonstrated that further asset recovery is likely; nor do I agree that such recovery is dependent upon being able to back-date the petition.

In my judgment, putting on one side blatant “fishing expeditions”, winding up may be justified by the recovery of the company’s books documents and records, and by enquiry into them and investigation of the transactions so disclosed which credible evidence establishes merit examination, even if it cannot be demonstrated (as at the date of restoration) that assets are likely to be recovered: it may still be “just” to require explanation (but equally it may sometimes be oppressive so to do). Winding up has a wider purpose than simply the collection, realisation and distribution of assets. In a business model where the income is generated by “upfront fees”, the work is possibly outsourced, and substantial indebtedness is generated by “chargebacks” for fruitless or inadequately performed work (and where there are significant recent distributions to shareholders), I do not consider it improper for a very substantial creditor to seek restoration to facilitate investigation into potential recoveries (in relation to which steps it will either have to invest its own money or persuade third party funders of the underlying merits of the claim). Nor are recoveries dependent on upon being able to “backdate” the petition. There are some proceedings which a liquidator could commence in 2016 which could be founded on breaches of duty by the directors (and perhaps knowing receipt by others) as far back as 2010.

I would adopt as my own some words of Robert Walker J in Re Oakleague Ltd [1995] 2BCLC 624 at 628i in relation to earlier legislation concerning these matters:-

“As often occurs in cases of this sort the restoration of the company to the register may do it some good or it may not. The attitude of the Companies Court is that provided the application for restoration falls within the general legislative purpose … the company will be restored, and whether the restoration does anyone any good or not is a matter to be decided by another tribunal in the future.”

For these reasons I hold that District Judge Troy correctly restored the Company to the register, and that Ms Sharma has demonstrated no ground for setting aside his order.

The effect of restoring the Company to the register is set out in section 1032(1) of the 2006 Act in this way:-

“The general effect of an order by the court for the restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved…..”

I must explore the consequences of that later in this judgement.

The fourth question is: the Company having been restored to the register, ought a winding up order to be made? In my judgment the answer is plainly in the affirmative, and Mr Doyle did not seek to persuade me otherwise. An insolvent company ought only to be restored to the register if some mechanism is put in place for its eventual dissolution when the purpose of restoration is exhausted or achieved. That is why paragraph 3.2(f) of the Practice Note requires evidence to be given of what is intended for the company and its assets and liabilities when it is restored. I will make an order winding up the Company.

The fifth question is: ought to the petition to be treated as if it was presented on some day other than 15 January 2015? Counsel for the applicant argued in writing that the petition should be treated as presented upon the commencement of the administration: but in oral argument he submitted that the appropriate date was the date of dissolution (which was the request made in the evidence: see paragraph 14 of the Third Witness Statement of Mr Sullivan).

It is necessary to identify the jurisdiction, and then to explain why it is said it should be exercised in the instant case.

Section 1032(3) of the 2006 Act empowers the court to

“..give such directions and make such provision as seems just for placing the company and all other persons in the same position ( as nearly as may be) as if the company had not been dissolved….”.

This jurisdiction is regularly exercised to address the problem that no proceedings could be commenced by or against the company whilst it was dissolved. The statutory fiction that on restoration “the company is deemed to have continued in existence as if it had not been dissolved” does not enable actions to be commenced where a limitation period has expired during the period of dissolution: and some direction has to be given “for placing the company and all other persons in the same position… as if the company had not been dissolved”. That is done by turning back the limitation clock to the date of dissolution and declaring that the period between the date of dissolution and the date of restoration shall not be counted for the purpose of any statute of limitation. It is this jurisdiction under s.1032(3) that I am being asked to exercise.

Whilst the administration continued, and down to the registration of the dissolution notice under para. 84(1) of Schedule B1, Ms Sharma could have applied for relief under section 238 of the 1986 Act (transactions at an undervalue) or section 239 (unlawful preference) and the Court could have made an order against the counterparty to the transaction restoring the position to what it would have been if the relevant transaction had not taken place. Transactions at risk under these sections with a connected party had to take place within the period of two years ending with “the onset of insolvency” (and with an unconnected party within a period of six months ending with “the onset of insolvency”).

By section 240(3)(b) of the 1986 Act “the onset of insolvency” of the Company was the date on which it filed its notice of intention to appoint an administrator. So Ms Sharma could have attacked transactions by the Company with connected parties going back to October 2010.

A liquidator of the restored Company could also avail himself of section 238 and section 239. By s. 240(3)(d) of the 1986 Act (and ignoring the special case of territorial proceedings under the EC Regulation) where a company goes into liquidation “at the time when the appointment of an administrator ceases to have effect” then “the onset of insolvency” is the date on which the notice of intention to appoint was filed. So in such cases a liquidator could take advantage of the “relevant date” determined by reference to the administration, and there would be a seamless insolvency. But this provision does not appear to help any liquidator because no liquidation of the Company commenced at the time Ms Sharma’s appointment ceased. After a short interval (during which the Company was in limbo) there was a dissolution. (This point was not argued: so my analysis of the effect of s.240(3)(d) must necessarily be provisional).

In all other cases, for the purposes of a subsequent liquidation “the onset of insolvency” is (under s.240(3)(e) of the 1986 Act) “the commencement of the winding up”. At its earliest in the present case this would be 15 January 2015: and that would be no help to a liquidator, because no “transactions” occurred after January 2013, the Company then being in administration.

So what I am being asked to do is to create a seamless insolvency by deeming the petition to have been presented on some date other than the actual date of presentation.

It is clear that I should not treat the petition as presented on the date the administration commenced. It is not possible to pretend that there was no administration, and (save in particular circumstances not applicable here) it is not possible to have a simultaneous administration and liquidation. So the real question is whether the clock can in some way be turned back to the date of dissolution (as asked): and if so, then what its effect might be.

The object of s.1032 of the 2006 Act is to put “the company and all other persons” in the same position as nearly as may be as if the company had not been dissolved, and the Court is empowered to give directions to that effect. Amongst the directions which may be given is that contemplated by s.1030(3) of the 2006 Act.

So far as concerns putting the Company in the same position as if it had not been dissolved, it is clear that the Court can, in relation to causes of action vested in the Company, give a direction that the period between the date of dissolution and the date of restoration shall not be counted for the purposes of any enactment as to the time within which proceedings may be brought by the Company. Before exercising that jurisdiction the Court must bear in mind what was said in Regent Leisuretime Limited v Natwest Finance Limited [2003] EWCA Civ 391 at [87] (about the essential fairness of bringing such an application to the notice of those likely to be affected by it) and at [90] (about the need for a company to justify the departure from the strict limitation regime). In the instant case the Company does not need such a limitation direction.

So far as concerns “other persons” who are to be put in the same position as if the Company had not been dissolved, I see no reason why a liquidator of the Company should not fall within the entirely general category “all other persons”. In my judgment the Court can give a direction that the period between the date of dissolution and the date of restoration shall not be counted for the purposes of any enactment as to the time within which proceedings may be brought by the liquidator.

However, a direction to that effect obtained at the request of Barclays would not avail Mr Wood. His problem is not that he is out of time to commence proceedings. His problem is that the transactions he may attack in those proceedings are defined by reference to a period that does not assist him. What he needs is a direction that creates a seamless insolvency, so that he can avail himself of the period that was available to the previous office-holder.

In Davy v Pickering [2015] EWHC 380 it was conceded before HHJ Keyser QC at a hearing in January 2015 that the Court could make a direction (in relation to a company struck off the register on 20 March 2012 and restored to the register on 1 July 2014) that

“..if the Claimant shall petition for the winding up of the company within 14 days of the date of this Order the petition shall be deemed to have been presented on 20 March 2012.”

The object of the exercise was to enable the party seeking that direction to attack distributions that had been made to shareholders so that the restored company would be in funds to satisfy his claim for negligent advice given by the company. Having conceded jurisdiction, Counsel argued that the direction ought not to be made. But HHJ Keyser QC held that s.1032(3) did not limit the way the Court could give directions, and if required for the purpose of placing the company in the same position (as nearly as may be) as if the company had not been struck off, then such a direction could be given.

The persuasiveness of this decision is weakened by the concession made. But the judgment remains of value for its focus on the words of the section, words which, as the Court of Appeal observed in Jodrell v Peakstone [2012] EWCA Civ 1035, are of “sweeping effect”.

The section empowers the Court to give whatever direction is necessary to give effect to the statutory fiction that the company continued in existence. In giving effect to this fiction it does not simply assume that the company had always existed, and then assess the justice of the case by reference to what other persons had actually done: so that a creditor who had actually commenced proceedings against the company (not knowing that it was dissolved) has those proceedings validated, but a creditor who had taken no proceedings at all is subject to the limitation period continuing to run. As a matter of essential fairness the Court gives back to the creditor an opportunity that might otherwise have been lost: had the company continued in existence the creditor could have commenced proceedings and stopped the relevant period running, even though the creditor did not in fact do so.

If the Company had not been dissolved then the position would have been that upon the registration of the paragraph 84 notice by Ms Sharma her appointment as administrator of the company would have ceased to have had effect: see paragraph 84(4) of Schedule B1 to the 2006 Act. By paragraph 1(2)(c) of Schedule B1 the Company would thereupon have ceased to be in administration. Barclays could have asked for the dissolution to be suspended and a winding up order made (see Re Hellas Communications (Luxembourg) [2011] EWHC 3176 (Ch) at [85]-[97]).

The dissolution foreclosed that opportunity, and it is that opportunity that may properly be restored i.e. the opportunity to present a petition at the date of dissolution. The words of s.1032(3) are large enough to enable the Court to give a direction and to make such provision as it thinks right for putting Barclays (and any newly appointed liquidator appointed upon a petition presented by Barclays) in the same position (as nearly as may be) as if the Company had not been dissolved. The sort of direction given in Davy v Pickering achieves that, albeit by deeming an act to have occurred at an earlier point in time than it in fact occurred. The words of section 1032(3) are of a comparable width to those on which Hart J relied in G-tech Construction [2007] BPIR 1275 in putting in place a retrospectively effective administration (and limiting the effect of CPR40.7(1) and distinguishing Darrell v Miller [2003] EWHC 2811)

But in my judgment this jurisdiction has to be exercised with extreme caution: it is by no means a routine ancillary order made on the occasion of a restoration. The Court must be satisfied that it is “just” to give the direction or make the provision. The creditor is asking for the company or its liquidator to be enabled to bring claims which it might not otherwise be able to bring (for one reason or another). The Court must be satisfied that it is just to relieve the company or its liquidator of such limitations: and in this context the observations made in Regent Leisuretime cited above about the burden to be discharged by the applicant have equal force. So too do the observations about fair notice to all persons likely to be affected by the order.

I am not satisfied that it is just to make any such direction in the instant case. First, the evidence does not tell me what it is that was discovered after the dissolution which makes all the difference and explains why Barclays did not apply to suspend the dissolution and petition for a winding-up within the three months after registration of the notice and before dissolution, but now feels able to do so . Mr Wood’s letter of advice to Barclays refers only to material produced at the outset of the administration as underpinning his view that investigations are warranted. Second, if there are transactions which warrant further investigation then the counterparties to those transactions (or the recipients of Company money) are known. Yet no notice of the application has been given to affected persons, other than to the directors. Fairness requires that third parties who would be prejudiced by the direction sought ought to be given the opportunity to be heard. (Sometimes the obscurity of the company’s affairs combined with a lack of investigation on the part of a previous officeholder will mean that the affected persons cannot be identified. In those circumstances it may be necessary to adjourn the application and permit it to be restored once any newly appointed liquidator has had a chance to investigate the company’s records).

I shall therefore make a winding-up order but make no direction under s.1032(3).

I conclude with two observations. First, even if I had been prepared to direct that the petition be deemed presented on the date of dissolution and not on the date of actual presentation, I am by no means clear that this would have created a seamless insolvency so as to enable the liquidator to backdate the onset of insolvency. All depends on how the 3-month period between registration of the notice of dissolution and actual dissolution is treated. That must be argued in an appropriate case. Second, wide as the words of s.1032(3) are, I do not think that they enable the Court address events before the dissolution e.g. to deem a petition presented as at the date of the notice of dissolution (rather than as at dissolution). The statutory fiction is that the company was in existence throughout, and the directions and provisions to be made to give effect to that fiction are directed to putting the relevant person in the same position as if the company had not been dissolved: no more and no less.