Leyland Printing Company Ltd & Anor, Re

In deciding whether to wind up a solvent company on the just and equitable ground, the court must weigh all the circumstances and the competing interests of creditors, members and the company. The balancing exercise includes the practical purpose and likely prejudice of liquidation, including whether an independent insolvency office-holder is needed to investigate and distribute assets. A company may properly be wound up despite solvency where it is no longer trading, its assets have been realised, creditor claims remain to be adjudicated, and returning control to financially interested members would risk unfairness or prejudice to creditors.

The judgment concerned winding-up petitions presented by the administrators of Leyland Printing Company Limited and Leyprint Limited. Both companies had been subject to administration orders since 2002 under the pre-Enterprise Act regime. The administrators said that the purposes of administration had been achieved and sought discharge of the administrations and compulsory winding-up orders.

Leyland Printing was accepted to be insolvent. Leyprint appeared solvent after excluding a pension liability said to relate to the other company. The central issue was whether Leyprint should nevertheless be wound up on the just and equitable ground, or returned to its directors and members.

1. Outcome. Winding-up orders were made against both companies. The administration orders were discharged. The existing administrator was released after three months. The costs of the administrator and the members were to be treated as expenses of the administration, but Scenestock Limited’s costs were excluded.
2. Statutory jurisdiction. Under Insolvency Act 1986, an administrator could present a winding-up petition. The court’s jurisdiction under section 122(1)(g) was available even though Leyprint was not shown to be insolvent.
3. Just and equitable assessment. The court applied the balancing exercise described in Re Walter L Jacob & Co Ltd [1989] BCLC 345. It had to consider all the circumstances, the competing interests and wishes of creditors, contributories and the company, and the reasons for and against compulsory winding up.
4. Application to Leyprint. Leyprint was not trading and all its assets had been realised. The remaining task was to investigate and pay any non-statute-barred creditors and distribute any surplus to the member or members. The identity of the members was not entirely free from doubt. A liquidation would place those matters in the hands of the Official Receiver, a disinterested insolvency office-holder, rather than returning control to directors and members with a financial interest in rejecting creditor claims. In those circumstances, winding up was just and equitable.
5. The court declined to extend the administrator’s release for six months, but considered three months appropriate to allow any further application concerning his conduct. It also declined to prospectively prevent the administrator or former administrators from seeking appointment as liquidators, particularly without a proper application and notice to the affected individuals.

First-instance decision. The judgment was stated to be read with the court’s earlier reserved judgment, [2010] EWHC 2105 (Ch), concerning the treatment of statute-barred claims.