In the matter of MSOLD1 Limited (in administration)

On an application under paragraph 79 of Schedule B1 to the Insolvency Act 1986, the court may terminate an administration and make a compulsory winding-up order on a suspended winding-up petition. The power should be exercised for the benefit of creditors as a whole. Relevant considerations include preserving the retrospective effect of section 127, enabling proper investigation, and whether a proposed company voluntary arrangement is sufficiently developed, funded and realistically capable of implementation. A speculative or unfunded proposal will not ordinarily justify continuing an administration where the company has no remaining assets and liquidation offers tangible benefits to creditors.

Joint administrators applied for orders terminating the administration of MSOLD1 Limited, reviving a suspended winding-up petition presented by DHL International (UK) Limited, winding up the company, dispensing with procedural requirements and appointing the administrators as liquidators. The application was opposed by Maker&Son Ops Limited and connected parties.

The dispute arose after the company’s business, assets, intellectual property and employees had been transferred to connected companies while the company was insolvent. The opposition relied principally on the possibility of a company voluntary arrangement offering creditors a substantial dividend. The central issues were whether the administration should continue, whether the company should be wound up on the suspended petition, and who should act as liquidators.

1. Termination of administration. The administration should cease under paragraph 79 of Schedule B1. The company had no remaining business or assets, and the proposed CVA was undeveloped and unsupported by forecasts, funding proposals or proof of funds. A CVA could be investigated in a liquidation.
2. Winding-up on suspended petition. Upon termination of the administration, the suspension of the DHL petition ceased. The court had power under paragraph 79(4)(d) of Schedule B1 to make a compulsory winding-up order on the suspended petition. Advertisement was unnecessary because the parties opposing the order had been heard and there was no real benefit in further advertisement.
3. Creditors’ interests and section 127. The winding-up order would preserve the retrospective effect of section 127 of the Insolvency Act 1986 and enable investigation into transactions transferring the company’s assets. Recovery, or the possibility of recovery, of those assets plainly benefited creditors as a whole. The proposed CVA did not outweigh those more tangible benefits.
4. Investigatory powers. Although administrators possess powers under sections 235 and 236, liquidators have wider powers under sections 238, 239, 411 and 412. Those powers might be required given the limited cooperation and lack of access to the company’s books and records.
5. Appointment of liquidators. The administrators were appointed as joint liquidators. They had a substantial head start in understanding the company’s affairs, which would save time and costs. The court found no inappropriate conduct and accepted that they would consider any CVA on its merits.

First-instance decision. No appellate history was stated in the judgment.