Fivestar Properties Ltd, Re

Restoration of a dissolved company under the Companies Act 2006 retrospectively treats the company as having continued in existence. Where the Crown has disclaimed freehold property vested as bona vacantia, the disclaimer extinguishes the company’s freehold interest but is not a disposition of the property. Restoration therefore retrospectively re-creates and re-vests the freehold in the company as if neither dissolution nor disclaimer had occurred. The court may restore the company where it is just to do so, including to enable secured assets to be realised for a creditor.

Fivestar Properties Ltd owned a commercial freehold charged to West Bromwich Commercial Ltd. Following default, the Bank appointed receivers and administrators. The administrators subsequently moved the company from administration to dissolution under paragraph 84 of Schedule B1 to the Insolvency Act 1986, although the freehold remained unrealised.

On dissolution, the freehold vested in the Crown as bona vacantia under section 1012 of the Companies Act 2006. The Crown then disclaimed it under section 1013, terminating the company’s freehold interest. The Bank applied to restore the company and wind it up immediately so that the property could be dealt with for the benefit of its security. The central issue was whether restoration re-vested the freehold despite the disclaimer.

1. The court ordered restoration of the company to the register and its immediate winding up. It was just to restore the company because restoration would enable the property to be realised, or more readily realised, for the benefit of the Bank as secured creditor.

2. The company was eligible for restoration under section 1029(1)(b) of the Companies Act 2006, since it had been deemed dissolved under paragraph 84(6) of Schedule B1 to the Insolvency Act 1986. The Bank had standing under the statutory categories of persons entitled to apply.

3. Under section 1032(1), restoration generally operates retrospectively. The company is deemed to have continued in existence as if it had not been dissolved. Subject to section 1034, property which would otherwise have become bona vacantia is therefore treated as having remained vested in the company.

4. The Crown’s disclaimer under sections 1013 to 1015 terminated the company’s freehold interest and caused the land to escheat to the Crown. The disclaimer did not transfer the freehold to the Crown. The court applied Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793, including its conclusions that escheat operates automatically and that subordinate interests are not extinguished.

5. Following Allied Dunbar Assurance plc v Fowle [1994] BCC 422, a disclaimer is an avoidance or extinguishment of the interest disclaimed, rather than a transfer or conveyance. It is therefore not a disposition for the purposes of the restoration provisions. Restoration retrospectively re-created and re-vested the freehold in the company as if the company had never been dissolved and the freehold had never been disclaimed.

6. The court noted, without deciding, possible alternative procedures where assets remain after administration, including avoiding dissolution, ending administration without moving to another procedure, exercising mortgagee powers, or seeking a vesting order under section 1017. These observations were not necessary to the decision.

First-instance decision. No prior appellate decision is stated in the judgment.