Greenbank Technology Limited (In Liquidation), Re

A failure to have a declaration of solvency made before a suitably qualified person is a fundamental non-compliance with the statutory requirements for a members’ voluntary liquidation. It is not a formal defect that the court may waive under rule 12.64 of the Insolvency Rules 2016. The consequence is that the winding up is a creditors’ voluntary liquidation. The court has no jurisdiction to rescind a voluntary liquidation under rule 12.59 or section 112 of the Insolvency Act 1986, but it has jurisdiction to stay a voluntary liquidation. A stay is discretionary and may be granted without a time limit where appropriate.

The joint liquidators, the company and its sole shareholder applied for relief after one director’s declaration of solvency had been witnessed by a support worker rather than a person authorised to administer oaths. The other director’s declaration was valid, and the company was solvent. The applicants sought waiver of the defect, rescission of the creditors’ voluntary liquidation, or an indefinite stay.

The issues were whether the defective declaration could be waived under rule 12.64 of the Insolvency Rules 2016, whether the court had jurisdiction to rescind a voluntary liquidation, and whether it could stay one under section 112 of the Insolvency Act 1986.

1. Waiver. The requirement in section 89 of the Insolvency Act 1986, read with section 18 of the Statutory Declarations Act 1835, that the declaration be made before a suitably qualified person was part of the statutory regime for a members’ voluntary liquidation. It was fundamental. The seriousness of the declaration was reinforced by the criminal consequences under section 89(4) and the presumption in section 89(5).
2. The court distinguished De Courcy v Clements and Re New Millennium Experience Co Ltd. Those decisions concerned construction of the expression statement of assets and liabilities and whether minor errors prevented compliance. They did not establish that a fundamental failure to make the declaration before a qualified person could be waived. A declaration made by video link before a qualified person was materially different from a purported declaration before an unqualified person.
3. The obiter observations in Galer v Mond, concerning waiver of a defect in an administrator’s statutory declaration, were distinguishable. They concerned an administrator’s appointment and a qualified person acting outside the jurisdiction, rather than the absence of a qualified person for section 89 purposes.
4. Because the declaration was not made before a qualified person, it was not a statutory declaration for section 89 purposes. The company was therefore in a creditors’ voluntary liquidation, and the application for waiver was refused.
5. Rescission and stay. Rule 12.59 of the Insolvency Rules 2016 concerns orders made by the court. It did not confer jurisdiction to rescind a voluntary liquidation. Section 112 did not assist because rescission was not a power exercisable in relation to a compulsory winding up.
6. The court nevertheless had jurisdiction under section 112 to stay a voluntary liquidation, consistently with Thomas v Parkwood Holdings Ltd and Re Calgary and Edmonton Land Co Ltd. The court granted a stay without a time limit, but declined to describe it as permanent or indefinite.

Not stated in the judgment. This was a first-instance application in the High Court.