Noal SCSp & Ors v Novalpina Capital LLP & Ors

The court has jurisdiction to appoint an additional liquidator in a members’ voluntary liquidation. The jurisdiction may arise under Insolvency Act 1986, sections 108 or 112, or under the court’s inherent jurisdiction.

Section 108 is capable of extending beyond a vacancy. It may permit an interlocutory appointment where the existing liquidator may be unable to perform his functions, including where a serious conflict is alleged. Section 112 is not confined to powers expressly created by statute. The inherent jurisdiction may also support protective interim relief where necessary to protect persons with a legitimate interest in the liquidation.

The applicants sought the removal and replacement of the liquidator of Novalpina Capital LLP, which was in members’ voluntary liquidation. They also sought the appointment of an additional liquidator pending determination of preliminary issues concerning the company’s solvency, the validity of its members’ voluntary liquidation and any conversion into a creditors’ voluntary liquidation.

A previous order provided for the appointment of an additional liquidator subject to confirmation that the court had jurisdiction. The issue before the court was confined to that jurisdictional question, not whether the appointment was appropriate on the facts.

1. Jurisdiction confirmed. The court had jurisdiction to appoint an additional liquidator in a members’ voluntary liquidation. The appointment of Robert Horton was therefore effective.
2. Section 108. Under section 108 of the Insolvency Act 1986, the words “no liquidator acting” can extend to a liquidator who may not be performing his functions. The court may therefore appoint an additional liquidator on an interlocutory basis where it is arguable that the existing liquidator is unable to act. A serious conflict may provide such a case. The court followed the reasoning in Clements v Udal.
3. Conflicts and protective relief. A conflict liquidator may be appointed to deal with a specified issue, for a limited period or for a longer duration. The court’s jurisdiction is not dependent on whether the liquidation is a members’ or creditors’ voluntary liquidation, nor on the identity of the applicant.
4. Section 112. Section 112 confers a broad power to determine questions arising in a voluntary winding up and to exercise powers which the court considers just and beneficial. It is not restricted to powers created expressly by statute. The reasoning in Re Comet Group Ltd was adopted. The court could direct the existing liquidator to apply for the appointment of an additional liquidator.
5. Inherent jurisdiction. The court also possessed an inherent jurisdiction to grant interlocutory relief where necessary and appropriate to protect persons with a legitimate interest in the liquidation. That jurisdiction was not displaced by sections 108 or 112. The court accordingly held that it had jurisdiction to appoint an additional liquidator.

First-instance decision. The judgment records an earlier interlocutory order by Chief Insolvency and Companies Court Judge Briggs, under which an additional liquidator was appointed subject to confirmation of jurisdiction.