Insolvency Act 1986, section 171

Removal, etc. (voluntary winding up)

Part IV Winding Up of Companies Registered under the Companies Acts

(1)This section applies with respect to the removal from office and vacation of office of the liquidator of a company which is being wound up voluntarily.

(2)Subject to the next subsection, the liquidator may be removed from office only by an order of the court or—

(a)in the case of a members’ voluntary winding up, by a general meeting of the company summoned specially for that puropose, or

(b)in the case of a creditors’ voluntary winding up, by a [F355decision of the company's creditors made by a qualifying decision procedure instigatedF355] specially for that purpose in accordance with the rules.

[F356 (3)Where the liquidator in a members' voluntary winding up was appointed by the court under section 108, a meeting such as is mentioned in subsection (2)(a) shall be summoned only if—

(a)the liquidator thinks fit,

(b)the court so directs, or

(c)the meeting is requested in accordance with the rules by members representing not less than one-half of the total voting rights of all the members having at the date of the request a right to vote at the meeting.

(3A)Where the liquidator in a creditors' voluntary winding up was appointed by the court under section 108, a qualifying decision procedure such as is mentioned in subsection (2)(b) is to be instigated only if—

(a)the liquidator thinks fit,

(b)the court so directs, or

(c)it is requested in accordance with the rules by not less than one-half in value of the company's creditors.F356]

(4)A liquidator shall vacate office if he ceases to be a person who is qualified to act as an insolvency practitioner in relation to the company.

(5)A liquidator may, in the prescribed circumstances, resign his office by giving notice of his resignation to the registrar of companies.

[F357 (6)In the case of a members' voluntary winding up where the liquidator has produced an account of the winding up under section 94 (final account), the liquidator vacates office as soon as the liquidator has complied with section 94(3) (requirement to send final account to registrar).

(7)In the case of a creditors' voluntary winding up where the liquidator has produced an account of the winding up under section 106 (final account), the liquidator vacates office as soon as the liquidator has complied with section 106(3) (requirement to send final account etc. to registrar).F357]

Definitions used in section 171 1

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act

Cases considering section 171 8

Fakhry v Pagden & Anor

[2020] EWCA Civ 1207 · 15 September 2020Limits

The court treated members’ statutory appointment and removal rights as important evidence of their interest in a members’ voluntary liquidation, while holding that those rights coexist with the court’s powers (see paras [31]; [66]; [77]). The court identified the members’ power to remove a liquidator at a meeting specially summoned for that purpose (see paras [30]-[31]). The court explained that this subsection restricts the mechanism by which members may remove a court-appointed liquidator, thereby qualifying members’ control (see paras [31]; [66]). The provision supplied the mechanism under which a court could direct meetings to consider removal of court-appointed liquidators. The Court of Appeal held that members’ meetings should be convened before final decisions on restoration and appointment (see paras [86]-[94]). The court explained when a liquidator vacated office under both the pre-2017 and amended procedures. This confirmed that the former liquidators had ceased office before dissolution and were not automatically revived on restoration (see paras [33]-[34]; [49]).

Kean v Lucas, Re: J&R Builders (Norwich) Ltd)

[2016] EWHC 2684 (Ch) · 28 October 2016

Applies the statutory basis for requisitioning a creditors’ meeting to consider removal of a liquidator. The provision engages the low-threshold approach to assessing creditor claims at the requisition stage. (see paras [3]-[4]; [9]-[12])

Hobbs & Anor v Gibson & Ors

[2010] EWHC 3676 (Ch) · 17 December 2010Interprets

Interprets the removal power as requiring removal by court order or, in a creditors’ voluntary winding-up, by a creditors’ meeting summoned specially in accordance with the rules. The later meetings did not satisfy that requirement. (see paras [21]-[26]) Applies the requirement for a specially summoned creditors’ meeting in a creditors’ voluntary winding-up. The attempted removal of Tailby was ineffective because the meeting was not properly convened. (see paras [21]-[26])

What each judgment says about section 171 is in the case-law panel in the full Act.

Amendments and notes

7 notes from legislation.gov.uk

Amendments

  1. F355Words in s. 171(2)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 42(2); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)
  2. F356S. 171(3)(3A) substituted for s. 171(3) (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 42(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)
  3. F357S. 171(6)(7) substituted for s. 171(6) (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 42(4); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications

  1. C480S. 171 applied (with modifications) (S.) (6.4.2001) by S.S.I. 2001/128, reg. 4(1), Sch. 2
  2. C481S. 171 applied (with modifications) (4.1.2024) by S.I. 2021/716, Sch. 1 para. 3 (as amended by The Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023 (S.I. 2023/1399), regs. 1(2), 20)
  3. C482S. 171 modified (S.) (6.4.2001) by S.S.I. 2001/128, reg. 4(2), Sch. 3
  4. C483S. 171(5)(6) amended (1.7.1999) by 1998 c. 46, s. 125, Sch. 8 para. 23(4)-(5) (with s. 126(3)-(11)); S.I. 1998/3178, arts. 2, 3 (as amended (28.6.2016) by The Building Societies (Floating Charges and Other Provisions) Order 2016 (S.I. 2016/679), arts. 1(1), 6)