Barclays Bank Plc (t/a Barclays Global Payment Acceptance) v The Registrar of Companies & Ors

A dissolved company formerly in administration may be restored at a creditor’s request to permit credible investigation into potential recoveries. Restoration is not confined to cases where identified assets have already been discovered, although it must be just and must not constitute a blatant fishing expedition. Where restoration is intended to facilitate investigation, winding up may properly follow even if recovery of assets cannot yet be demonstrated. The court may have jurisdiction under section 1032(3) of the Companies Act 2006 to deem a winding-up petition presented at an earlier date, but that jurisdiction is exceptional. It requires proof that the direction is just and ordinarily requires fair notice to persons likely to be prejudiced. The court declined to create a seamless insolvency on the evidence before it.

Client Connection Limited entered administration on 9 October 2012. Its administrator sold the ongoing business, realised approximately £70,000, incurred substantial fees and ultimately proposed dissolution under Schedule B1 to the Insolvency Act 1986. The company was dissolved on 26 December 2013.

Barclays, the principal creditor, alleged that several transactions required investigation, including payments to a connected company, upfront sales, phantom sales and dividends. It obtained an order restoring the company to the register and then sought its winding up, together with a direction under section 1032(3) of the Companies Act 2006 deeming the winding-up petition to have been presented at an earlier date. The issues were the administrator’s standing, rescission of the restoration order, winding up, and retrospective dating of the petition.

The court held as follows.

1. Standing. A former administrator does not automatically have an interest in restoration. However, where the applicant’s evidence questions the administrator’s conduct and the identity of a proposed liquidator, the former administrator has a sufficient interest to participate and to correct or supplement relevant evidence. She need not have been joined at the outset under the ordinary restoration procedure.
2. Restoration. Rule 7.47 of the Insolvency Rules 1986 did not apply because the restoration order was made under section 1031(2) of the Companies Act 2006, not in exercise of insolvency jurisdiction. The court nevertheless treated the application as an appeal by a person adversely affected. Restoration was expressly contemplated by section 1029 and was not confined to cases involving already discovered assets. The relevant question was whether restoration was just, with particular weight given to those having an economic interest in the potential assets.
3. There had been no informed election by creditors not to pursue further investigations. Limited investigations and inadequate disclosure did not justify treating the creditor’s later application as unfairly prejudicial. Winding up could be justified by recovery of the company’s books, documents and records and by investigation of transactions supported by credible evidence, even where recovery was uncertain. The purpose of winding up was wider than immediate asset collection and distribution.
4. Winding up. Once restored, an insolvent company should ordinarily be placed under a mechanism leading to its eventual dissolution. The company was therefore ordered to be wound up.
5. Retrospective direction. Section 1032(3) confers wide power to place the company and other persons, as nearly as possible, in the position they would have occupied had dissolution not occurred. This may include deeming a petition to have been presented earlier. The power must be exercised with extreme caution. The applicant must establish that the direction is just and give fair notice to affected third parties. Barclays failed to explain what post-dissolution discovery justified the direction and had not notified potentially affected counterparties. No direction was made under section 1032(3).
6. The court observed that it remained unclear whether deeming presentation at the date of dissolution would create a seamless insolvency, and that section 1032(3) could not reach events before dissolution by deeming presentation at the date of the dissolution notice.

The judgment itself records no appeal or earlier judicial determination in the same proceedings. District Judge Troy had previously ordered restoration of the company to the register on 10 March 2015; the High Court upheld that restoration and made a winding-up order, but refused the requested direction under section 1032(3) of the Companies Act 2006.