Ramora UK Ltd, Re

Where a winding-up petition is presented in breach of an interim moratorium under Schedule B1 to the Insolvency Act 1986, the petition is not thereby a nullity. The petition should, however, be treated as ineffective for the purpose of preventing a valid out-of-court appointment of administrators under paragraph 22. Paragraph 25 should be construed consistently with the moratorium’s protective purpose. Accordingly, an appointment may remain valid despite an extant petition presented in contravention of the moratorium.

Directors filed a notice of intention to appoint administrators on 14 April 2011. During the resulting interim moratorium, HM Revenue and Customs presented a winding-up petition. The directors later filed a notice of appointment without knowing of the petition, which had not been served.

The issue was whether paragraph 25 of Schedule B1 prevented the appointment because a winding-up petition had been presented, notwithstanding that its presentation breached the moratorium. The court considered the earlier decision in Arucana Limited and the later decision in Red Web Security UK Limited.

1. Validity of appointment. The appointment of the administrators was valid. Paragraph 25 appears to prevent an appointment under paragraph 22 where a winding-up petition has been presented and remains undisposed of.
2. Effect of the moratorium. The interim moratorium protects the company from creditor action of the kind identified in paragraphs 42 to 44 of Schedule B1. Paragraph 44(7), by dispensing with permission for a public-interest winding-up petition, confirms that permission is required for an ordinary winding-up petition. HMRC’s lack of knowledge did not alter the statutory effect of the moratorium.
3. Construction of paragraph 25. A petition presented in breach of the moratorium is not a nullity. Nevertheless, the reference to a winding-up petition in paragraph 25 must be construed as excluding a petition presented in contravention of the interim moratorium. Otherwise, the paragraph 25 prohibition would defeat the policy of the moratorium.
4. Authorities. To the extent that Arucana Limited suggested that an appointment could not proceed until the petition was dealt with, that reasoning was not followed. The court preferred the later reasoning in Red Web Security UK Limited, which had followed oral argument and held that the appointment could take effect despite the improperly presented petition.
5. The court made the requested declaration that the appointment was valid. The costs of the application were to be treated as an expense of the administration.