Arucana Ltd, Re

During an interim moratorium under Schedule B1 to the Insolvency Act 1986, the presentation of an ordinary winding-up petition is prohibited without the court’s permission. The petition is not a nullity merely because it was issued in breach of the moratorium. It may be stayed pending an application for permission. While the petition remains issued and undisposed of, the company’s directors cannot appoint administrators under paragraph 25(a). The court must resolve the conflict between the petition and the proposed appointment.

The directors filed notice of their intention to appoint an administrator and notified the holder of a qualifying floating charge. An interim moratorium consequently arose. Shortly afterwards, a creditor filed a winding-up petition. The court was asked to determine whether the petition could be presented during the interim moratorium and, if so, whether its presentation prevented the directors from appointing administrators.

1. The interim moratorium under paragraph 44(2) of Schedule B1 expressly applies the provisions of paragraphs 42 and 43, despite the company not yet being in administration. Paragraph 43(6) therefore prohibited the institution of legal process without the court’s permission.
2. A winding-up petition falls within the ordinary meaning of legal process and legal proceedings. The headings of paragraphs 42 and 43 could not restrict the operative words. Paragraph 44(7), which expressly permits certain winding-up petitions, reinforced the conclusion that other petitions were prohibited.
3. The court applied the reasoning in Re a Company No 001992 of 1988, under which advertisement of a winding-up petition constituted the continuation of proceedings. The earlier statutory language and the present reference to legal process, including legal proceedings, had substantially the same effect.
4. The court also applied the reasoning in Carr v British International Helicopters Ltd [1993] BCC 855. A proceeding issued without the required permission was not a nullity where the statutory purpose could be achieved by staying it and allowing permission to be sought.
5. The petition was therefore properly issued but stayed, except for an application for permission to continue it, until permission was granted or the interim moratorium expired without an administrator being appointed. Because it remained issued and undisposed of, paragraph 25(a) prevented the directors’ proposed appointment. The competing applications were left to be resolved by the court.