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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Ramora UK Ltd, Re [2011] EWHC 3959 (Ch) (26 August 2011) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2011/3959.html Cite as: [2011] EWHC 3959 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY

		Priory Courts 33 Bull Street Birmingham B4 6DS
		26th August 2011

1. THE JUDGE: In this case directors of a company filed a notice of intention to appoint administrators on 14^th April 2011, pursuant to paragraphs 26 and 27 of Schedule B1 of the Insolvency Act 1986 ("Schedule B1"). This was followed by the filing of a notice of appointment on 28^th April 2011 at 10:45 am, pursuant to paragraph 29 of Schedule B1. A question has arisen in relation to the validity of that appointment. The reason for that is that on 20^th April 2011 (that is to say whilst the interim moratorium was in force) Her Majesty's Revenue and Customs presented a winding up petition in the Royal Courts of Justice. They were ignorant of the filing of the notice of intention to appoint. Likewise, at the time of filing the notice of appointment, the directors of the company were ignorant of the existence of the petition, as it had not then been served.
2. Paragraph 25 of Schedule B1 provides that:

"An administrator of a company may not be appointed under paragraph 22 if:

(a) a petition for the winding up of the company has been presented and is not yet disposed of…"

On the face of it, therefore, a petition having been presented, the directors could not effect the appointment on 28^th April 2011. That prima facie was so, notwithstanding the fact that the presentation of the petition was inadvertently in breach of the statutory moratorium produced by the notice of intention to appoint.

3. It was held in Arucana Limited [2009] EWHC 3838 (Ch), a decision of HHJ David Cooke decided in July 2009, that a petition presented in breach of the moratorium provisions is not a nullity However, the Judge in that case did suggest that where there was both a notice of intention to appoint followed by a winding up petition (in that case, on the same day as the filing of the notice of intention to appoint) brought in breach of the statutory moratorium, the consequence was that neither could proceed unless and until the court had dealt with one or the other of them. Thus (he held) the proposed out of court appointment could not proceed until the petition had been dismissed, and the petition, having been brought during the period of the interim moratorim, should be stayed until the appointment period had expired without an appointment being made. He invited the parties to arrange an early hearing to resolve the matter. Because of the urgency, his ruling was made on written submissions alone, without the benefit of oral argument, within days of the notice of intention to appoint and petition.
4. Mr Weaver has also referred me to the subsequent decision of the same Judge in Red Web Security UK Limited (15^th October 2009). The decision is unreported but I have been provided with a note of the decision by Mr Weaver. That note was prepared by Mr James Morgan, a well known counsel specialising in insolvency matters, for the purposes of a seminar. Judge Cooke has confirmed to me that the note is, as far as he can recall, accurate. I am in those circumstances prepared to accept the note as an accurate record, though it is perhaps unfortunate that no-one has asked for the judgment to be transcribed. The point in issue does arise with some frequency when there are different insolvency procedures, often instituted in different courts.
5. That was a case where, as the judge found, an appointment was purportedly effected on Friday, 11^th September 2009 by delivery of the notice of appointment to the court, following an earlier notice of intention to appoint. The court did not in fact file the notice of appointment until the next day, 12^th September, by which time the period during which an appointment might be made had expired.
6. The judge held that the administration took effect on Friday, 11^th September, subject to the effect of the presentation of the petition in contravention of the statutory interim moratorium. That petition, again, was presented by Her Majesty's Revenue and Customs in circumstances where they were ignorant of the notice of intention to appoint.
7. Mr Morgan's note (with the correction of a typing mistake) continued:

"The Judge then went on to consider whether the presentation of the winding up petition on 10/09/09 was prohibited by the statutory interim moratorium notwithstanding that the HMRC was unaware and whether the winding up petition was sufficient to mean the prohibition in para 25 (appointment under para 22 if petition has been presented) in effect rendered the appointment made on 11/09/09 ineffective.

The Judge accepted that the purpose of the interim moratorium is to protect the company from the sort of creditor action set out in paras 42-44 and therefore prima facie the presentation of the winding up petition was prohibited by the moratorium (although that did not make it a nullity). In particular, he relied upon para 44(7) which - by providing that permission was not required to present a public interest winding up petition – confirmed that permission was required to present 'ordinary' winding up petitions. He then concluded that the regime in para 25 is inconsistent with the policy objectives unless the reference to winding up petition in para 25 is construed as excluding winding up petitions presented in contravention of an interim moratorium."

8. That case, therefore, raised directly the question of whether a winding up petition was sufficient to defeat the power of the directors to make an appointment. The Judge held that it did not. In those circumstances, the appointment of the administrators was effective.
9. That seems, in one sense, to be in conflict with Arucana. However, in Arucana, no appointment had in fact been effected at the time of the Judge's ruling. That is unlikely to be a vital distinction, however. The logic of the Red Web Security decision is that the directors could in Arucana have proceeded to make an appointment despite the newly presented petition. That is what had happened in Red Web Security and Judge Cooke, for the reasons he gave, held that the directors were entitled to proceed in that way.
10. To the extent that the decisions are in conflict, I prefer Judge Cooke's reasoning as set out in Mr Morgan's note, which Mr Weaver adopts before me. It is also the later of the two decisions and followed (I have been told) oral argument. Accordingly, I determine that the appointment of the administrators in this case was valid.
11. A draft order is before me. It sets out the following declaration:

"It is declared that the appointment of the administrators pursuant to:

(a) a form 2.8B notice of intention to appoint an administrator by company or director(s) filed at court on 14^th April 2011;

(b) a form 2.9B notice of appointment of an administrator by company of director(s) filed at court on 28^th April 2011; and

(c) paragraph 22 of Schedule B1 of the Insolvency Act 1986 ("the Act")

was a valid appointment notwithstanding that, at the time of the appointment, a winding up petition presented by Her Majesty's Revenue and Customs on 20^th April 2011 remained extant and the provisions of paragraph 25 of Schedule B1 of the Act"

I make that declaration. The costs of this application shall be treated as an expense of the administration.