Metrocab and Frazer Nash v Official Receiver & Ors

An application to rescind a winding-up order under rule 7.47(4) of the Insolvency Rules must be made within seven days. The short period protects certainty after winding up and is intended for a mistake in the winding-up or a matter that can be remedied promptly, such as a sudden influx of cash. It is not intended to permit those behind a company to spend months seeking finance before applying. A refusal to extend time will be respected on appeal where the delay is substantial and the explanation provides no realistic basis for intervention.

Two companies sought to set aside or rescind winding-up orders. It was accepted that the orders had been properly made because the companies were insolvent when they were made. Applications under rule 7.47(4) of the Insolvency Rules were issued approximately four months and three and a half months late. The High Court deputy judge considered that delay excessive and rejected the explanations, which principally concerned attempts to obtain funding and a contract.

The companies renewed an application for permission to appeal. They challenged the assessment of the reasons for delay and raised issues concerning a disputed landlord’s debt and missing records. The central issue was whether the deputy judge had wrongly exercised his discretion concerning an extension of time.

1. Disposition. Lord Justice Jacob refused the renewed application for permission to appeal. There was no realistic prospect that the Court of Appeal would interfere with the deputy judge’s exercise of discretion. [2010] EWCA Civ 1572.
2. Purpose of the time limit. Rule 7.47(4) of the Insolvency Rules requires an application to rescind a winding-up order to be made within seven days. The exceptionally short period reflects the need for certainty after a winding-up order has been made, so that interested persons can know their position and act on the order. It is directed principally to a mistake in the winding-up or to a matter capable of being remedied very quickly, such as a sudden influx of cash.
3. Extension of time. The rule does not provide a mechanism for those behind a company to spend months seeking funding and then apply to undo the winding-up order. Delays of approximately three and a half and four months were far beyond the prescribed period. The explanations, including the eventual acquisition of a contract, did not justify appellate intervention, particularly since there had been earlier opportunities to put the companies’ affairs in order.
4. Other issues. It was unnecessary to determine the arguments concerning the alleged landlord’s debt or the absence of company records. Lord Justice Jacob indicated that those arguments also faced formidable difficulties.
5. Consent. The suggestion that parties had lost interest or should be treated as consenting was rejected. Actual consent was required for the proposed consent route. Lord Justice Jacob further observed that even a consent order would not necessarily enable the Court of Appeal to allow an appeal by consent; this observation was unnecessary to the disposition.

• Court of Appeal (Civil Division) — [2010] EWCA Civ 1572: renewed application for permission to appeal refused.
• High Court of Justice, Chancery Division, Companies Court — Mr Philip Marshall QC sitting as a Deputy: applications to set aside or rescind the winding-up orders were treated as substantially out of time, and the explanations for delay were rejected. No citation is stated in the judgment.