Cartwright & Anor v The Registrar of Companies

Under paragraph 83 of Schedule B1 to the Insolvency Act 1986, an administration converts into a creditors’ voluntary liquidation when the registrar registers the conversion notice. Receipt or filing of the notice does not effect conversion.

Registration simultaneously terminates the administration and commences the liquidation. Where an administrator duly files a conversion notice before the appointment would otherwise expire through effluxion of time, the appointment is impliedly extended until registration. The extension preserves a seamless transition and remains subject to earlier termination through death, resignation, removal or loss of qualification.

The joint administrators of Globespan Airways Ltd sent the registrar a valid notice intended to convert the administration into a creditors’ voluntary liquidation. The registrar rejected that notice for omitting the proposed liquidators’ address, although their address appeared elsewhere on the form. Two further notices followed, and the registrar registered the third on 4 February 2011.

Briggs J held in [2012] EWHC 359 (Ch) that conversion occurred when the registrar received the first notice on 14 December 2010. The registrar appealed.

The principal issue was whether conversion under paragraph 83 of Schedule B1 to the Insolvency Act 1986 occurs upon receipt or registration of the notice. A subsidiary issue was whether filing a notice automatically extends an administrator’s appointment where it would otherwise expire before registration.

1. Appeal allowed. Paragraph 83(6) of Schedule B1 to the Insolvency Act 1986 provides that conversion occurs when the registrar actually registers the conversion notice, rather than when the registrar receives it. Receipt and registration are distinct statutory events. Registration requires the registrar to place the relevant information on the company’s file and must carry the same meaning in paragraphs 83(4) and 83(6).

2. This construction gives effect to both the language and purposes of paragraph 83. Registration simultaneously terminates the administrator’s appointment and commences the creditors’ voluntary liquidation. It therefore provides a streamlined and seamless transition. It also accords with the statutory policy that significant corporate events, including the appointment of a liquidator, should be checked and made public through the register and the Gazette.

3. Actual registration was required; it was insufficient that the registrar ought to have registered the first notice earlier. Although the third notice was invalid because it was executed and filed after the administrators’ original term had expired, the registrar was obliged to register the valid first notice. Registration of the third notice was therefore treated in law as effective registration of the first notice. The conversion date was 4 February 2011.

4. An administrator may validly file a conversion notice even where the appointment would otherwise expire before the notice takes effect. Once a notice is duly filed, paragraph 83(6) impliedly extends an appointment which would otherwise expire through effluxion of time until registration. Paragraph 76 is not an exhaustive code governing cessation or extension, and the specific purpose of paragraph 83 requires continuity between the two insolvency procedures.

5. The implied extension remains subject to paragraphs 87 to 89. An administrator’s appointment may therefore end before registration through death, resignation, removal by the court or loss of qualification.

6. The register was to be amended to show that the administration ended and the liquidation commenced simultaneously on 4 February 2011. The retrospective-date provisions consequently continued to apply. Moses LJ and the Master of the Rolls agreed with Arden LJ.

1. Court of Appeal (Civil Division): In [2012] EWCA Civ 1159, the registrar’s appeal was allowed. The court held that conversion occurred upon registration on 4 February 2011 and that the administrators’ appointments were extended until that date.

2. High Court, Chancery Division: Briggs J held in [2012] EWHC 359 (Ch) that conversion occurred when the registrar received the valid first notice on 14 December 2010 and ordered the register to reflect that date.