Armstrong Brands Ltd, Re

A qualifying floating charge is validly executed if the company document was signed by the required authorised signatories at the time of signature. Later dating, delivery or completion of the transaction does not retrospectively invalidate execution. Execution and delivery need not be simultaneous where a contrary intention is established. The statutory deeming protection for purchasers requires the relevant good-faith condition to be satisfied. A charge-holder with a properly executed qualifying floating charge may validly appoint administrators, and acts done under the administration remain valid.

Administrators of the company sought declarations concerning the validity of their appointment and subsequent acts. The appointment had been made by J.B. Armstrong & Co. Ltd as purported holder of a qualifying floating charge secured by a debenture signed in the company’s name.

The apparent difficulty was that Keiron Armstrong, who signed for the company, was no longer a company director when the loan and debenture were dated and the loan was authorised. The court considered whether the documents had instead been signed earlier, when he was a director, whether statutory execution requirements were met, and whether the administration extensions and replacement appointment were valid.

1. Validity of the charge. The debenture was an instrument creating a charge and therefore had to be duly executed in accordance with Companies Act 2006, section 44. A letter authorising a former director to sign could not independently overcome the statutory execution requirements, consistently with Hilmi & Associates Ltd v Pembridge Villas Freehold Ltd [2010] 1 WLR 2750.
2. The contemporaneous minutes and related evidence established, on the balance of probabilities, that the loan agreement and debenture had been signed in early June 2008, when Mr Armstrong was still a director, although they were dated 15 September 2008. They were also signed by the company secretary. Section 44 was therefore satisfied.
3. Execution and delivery, although presumed simultaneous under section 46(2), need not be simultaneous where a contrary intention is proved. The evidence showed that delivery was intended to occur only when J.B. Armstrong & Co. Ltd authorised and made the loan. Alternatively, the documents were held in escrow until that acceptance. Later delivery required board authority, which was supplied by the company’s September minutes.
4. The argument based on the purchaser deeming provision in section 44(5), relying on Lovett v Carson Country Homes Ltd [2011] BCC 789, did not assist because the signatory’s knowledge was attributable to the charge-holder. The court therefore decided the matter on the timing and validity of execution.
5. J.B. Armstrong & Co. Ltd held a properly executed qualifying floating charge and had power under paragraph 14 of Schedule B1 to appoint administrators. The original appointments, the extensions under paragraph 76(2)(b), and all ensuing acts were valid. The alternative indemnity claim under paragraph 21(2) did not arise. The later block transfer order supplied an alternative basis, but it was unnecessary to rely on it.