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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Bevan v Paul Walker the Company & Anor [2018] EWHC 265 (Ch) (15 February 2018) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2018/265.html Cite as: [2018] Bus LR 923, [2018] WLR(D) 103, [2018] EWHC 265 (Ch)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BIRMINGHAM
Insolvency and Companies List (ChD)

		Birmingham Civil Justice Centre Bull Street, Birmingham B4 6DS
		15th February 2018

HHJ PURLE QC:

1. On 16^th December 2014 the First Respondent was appointed as liquidator of the Company. This was a members' voluntary liquidation preceded by the requisite declaration of solvency. Following an increase by many millions of pounds in the claim of the 4^th Respondent, HMRC, the liquidation was converted into a creditors' voluntary liquidation on 26^th August 2015 and the Applicants were appointed joint liquidators. That meeting was a creditors' meeting convened by the First Respondent.
2. Section 84(1)(b) of the Insolvency Act 1986 provides that a company may be wound up voluntarily if the company resolves by special resolution that it be wound up voluntarily. That undoubtedly occurred in this case. However, no written notice of the resolution was given to HSBC, which was the holder of a qualifying floating charge. Though the charge may not have been enforceable on 16^th December 2014, so that HSBC may not have been able to appoint an administrator under paragraph 14 of Schedule B1 of the Insolvency Act 1986 (see paragraph 16 of the same Schedule) it existed.
3. The Applicants became concerned as to the validity of their appointment, which in turn depended upon the validity of the First Respondent's appointment as liquidator, as he only had capacity to convene a creditors' meeting if validly appointed himself. I determined that the original resolution and the successive appointments of liquidators were valid for reasons which I would give later. These are those reasons.
4. Section 84(2A) of the Insolvency Act 1986 provides that a company "must" give written notice to the holder of any floating charge to which section 72A applies.
5. Section 72A in turn adopts the meaning of "holder of a qualifying floating charge" in paragraph 14 of Schedule B1. That meaning sets out the formal requirements of qualification in paragraph 14(2). They apply to the HSBC charge. The Applicants accept that the HSBC charge was a qualifying floating charge and that notice of the resolution to wind up should therefore have been given.
6. Although the indications are that the charge was not enforceable at the time, that did not dispense with the requirement to give notice, the object of which is to give the charge holder the opportunity to appoint an administrator before the resolution to wind up can take effect. The charge holder must be entitled to reach its own view on enforceability which in some cases may (depending upon the terms of the charge) be triggered merely by a proposed resolution to wind up. It is not for the company giving the charge to decide on unenforceability and thereby excuse the giving of notice. The charge holder is entitled to know of the proposed resolution and take its own counsel. Although therefore paragraph 16 of Schedule B1 precludes the appointment of an administrator if the charge is not enforceable, that does not in my judgment limit the meaning of the expression "qualifying floating charge".
7. Section 84(2B) provides that where notice is given under subsection (2A) a resolution for winding up may be passed only after 5 days or with the written consent of the charge holder. This did not occur in this case as no notice was given.
8. HSBC did not resist the relief sought by the Applicants and was content with the creditors' voluntary liquidation. HMRC also provided a witness statement of Eleanor Jones agreeing to the relief sought by the Applicants.
9. In my judgment, once a special resolution is passed to wind a company up, that resolution is effective to put the company into liquidation notwithstanding any failure to give notice to a qualifying charge holder. A qualifying charge holder may well have a remedy if dissatisfied with the result, for example petitioning for the compulsory winding-up of the company or applying for a stay of the winding-up so as to enable an administrator to be appointed by the charge holder, but the validity and effect of the resolution cannot be impugned so long as it is passed in accordance with the company's articles of association.
10. I was referred to cases such as re Eco Link Resources Ltd. [2012] B.C.C. 731, holding that an administrator's appointment may be invalid where no notice is given to a qualifying floating charge holder. In my judgment, the cases on administrators' appointments, which do not all speak with one voice, are of no or limited assistance in the present context. The power to wind up voluntarily is vested in the members, derives from legislation which pre-dates administration by many decades, and enjoys the simple requirement of a special resolution. I am most reluctant to conclude that Parliament, by inserting a requirement of notice to a third party, must be taken to have intended that a special resolution to wind up should be of no effect whatsoever even where that third party is unaffected and does not object. In re Centrebind Ltd. [1967] 1 W,L,R, 377, a liquidator was found to be validly appointed notwithstanding the failure to hold a creditors' meeting. Although the statutory language there under consideration relating to the calling of a creditors' meeting was different to that now under consideration relating to the giving of notice to a qualifying charge holder, I would adopt the approach of Plowman J who simply gave effect to the plain language of section 278(1) of the Companies Act 1948 requiring (then) an extraordinary resolution. The practical effect of that decision has now been qualified by Parliament in section 166 of the Insolvency Act 1986, which limits abusive applications, but recognises the correctness of the Centrebind decision.
11. It follows that the initial appointment of a liquidator on 16^th December 2014 and the subsequent appointment of the Applicants were valid.