Nygate & Anor v E Squared Ltd

Where administrators send a paragraph 83 notice while their appointment remains in force, a later registration of the notice is effective to move the company into creditors’ voluntary liquidation. The statutory wording makes registration the operative event. The administrators need not still hold office when registration occurs. The notice must, however, have been sent before the appointment ceased to have effect. The court declined to decide whether sending the notice impliedly extended the administrators’ appointment pending registration.

Two applications concerning companies in administration raised the same construction issue under Schedule B1 to the Insolvency Act 1986. In each case, administrators sent a notice under paragraph 83 before their appointments expired, but the registrar registered it after the appointments had ceased under paragraph 76. The applicants sought declarations that the companies had nevertheless entered liquidation on registration of the notices and that the former administrators were the liquidators.

1. Declarations granted. Each company was wound up on the date on which the relevant paragraph 83 notice was registered. The liquidators were the companies’ former administrators.
2. Paragraph 83 creates a simple transition from administration to creditors’ voluntary liquidation. Under paragraph 83(3), the administrator may send the notice where paragraph 83(1) applies. Under paragraph 83(4), the registrar must register it on receipt. Paragraph 83(6) then provides that, on registration, the administrator’s appointment ceases to have effect and the company is wound up as if a resolution for voluntary winding up under section 84 had been passed on the registration date.
3. The statutory language in paragraph 83(6) is express and mandatory. It does not make the winding-up conditional on the administrator still being in office when registration occurs. Reading in such a condition would undermine the intended seamless and inexpensive transition, create uncertainty for creditors, and require administrators to act prematurely to allow for possible registration delays.
4. The critical requirement is that the notice was sent while the administrator remained in office. If it was sent only after the appointment had ceased, paragraph 83 could not produce the same result merely because the registrar later registered it.
5. The court distinguished Re Ballast Plc [2005] 1 WLR 1928, observing that the particular circumstances before the court had not been relevant for consideration in that case. The court did not decide whether sending a paragraph 83 notice impliedly extended the administrator’s appointment until registration. That question could matter for limitation periods under section 240(3)(d) in proceedings under sections 238 and 239.