On 28 April 2023 Louis Doyle KC appeared before HHJ Cawson KC in the Insolvency & Companies List of the Business & Property Courts in Manchester for the joint liquidators of Re Glendale Liverpool Limited (in liquidation) – Lila Thomas and David Hudson of FRP Advisory, instructed by James Robbins of Harrison Drury solicitors – and obtained a highly unusual order under s.112 of the Insolvency Act 1986 staying the creditors’ voluntary liquidation (CVL) of the company, which had commenced on 27 March 2019, so as to allow the company to be returned to its directors and a significant surplus that had accrued in the course of the liquidation to be paid to the company’s parent.
Louis advised on and was central in devising the stay application as a novel exit route from CVL. Although the court has an express power to stay a compulsory liquidation under s.147 of the 1986 Act, there is no corresponding express provision applicable to voluntary liquidations. The effect of the stay was to bring the CVL to an end, as recorded on the company file at Companies House. (In practice, the reference to the previously operative CVL remaining on the register may carry a slight risk that a third party misinterprets the remaining entry). The application also included claims for consequential relief by way of orders for the release of the joint liquidators pursuant to s.173(2)(e)(ii) consequent upon the joint liquidators vacating office under s.171(7).
In considering the application, the Court had regard to the judgments of Buckley J in In re Telescriptor Syndicate Ltd [1903] Ch 174, Megarry J in In re Calgary and Edmonton Land Co Ltd [1975] 1 WLR 355, Slade J in In re J Burrows (Leeds) Ltd (in liquidation) [1982] 1 WLR 1177, Brightman LJ in In re Roaro Co Ltd [1980] Ch 196 and Harman J in Re Lowston Ltd [1991] BCLC 570, as well as a number of Australian cases where the stay jurisdiction has been extensively developed, including the judgment of Black J in Re MWM Sidney Pty Ltd (in liquidation) [2016] NSWSC 688, as referenced most recently by McKerracher J in the Federal Court of Australia in Hughes, in the matter of Substar Holdings Pty Ltd (in liquidation) (No.2) [2021] FCA 658, Young J’s decision of the Supreme Court of New South Wales (Equity Division) in Austral Brick Co Pty Ltd v. Falgat Constructions Pty Ltd (1990) 2 ACSR 766 and the decision of Haslam J in the Supreme Court of New Zealand in Ross v. P J Heeringa Ltd [1970] NZLR 170 which is strongly supportive of the proposition that it is not possible for a company resolution to reverse an earlier resolution placing the company into voluntary liquidation.
