In our last issue, we looked at the implications for out-of-court administrations where the company or directors seek to appoint an administrator under paragraph 22 of Schedule B1 to the Insolvency Act 1986, but then discover that between filing their notice of intention to appoint and their notice of appointment, a winding-up petition has been presented, triggering paragraph 25 of the Schedule. Paragraph 25 prevents the appointment of an administrator under paragraph 22 where there is a pending winding-up petition.
The wording of the moratorium provisions at paragraphs 42 and 43 of the Schedule (which, pursuant to paragraph 44 (4), take effect on the filing of the notice of intention to appoint) is unhelpful. Paragraph 42, while headed "Moratorium on Insolvency Proceedings", prevents themaking of a winding-up order but imposes no bar on the presentation of a petition. Paragraph 43, in contrast, is headed "Moratorium on other Legal Process", suggesting it does not apply to insolvency proceedings.
A first instance decision in Re Ramora UK  EWHC 3959 (CH), only recently reported, has now helpfully clarified the position. The case concerned the effect of a winding-up petition presented by a creditor after the company's directors had given notice of their intention to appoint an administrator but before the actual appointment. Approving two earlier, unreported decisions, His Honour Judge Purle QC concluded that the moratorium imposed by paragraph 43(6) of the Schedule on the institution or continuance of "legal process" against the company, did extend to insolvency proceedings, including the presentation of a petition in spite of the headings of paragraphs 42 and 43.
The judge therefore found that the petition had been presented in breach of the interim moratorium. While this did not of itself render the petition a nullity, it meant that paragraph 25 of the Schedule had not been triggered. The judge was satisfied that paragraph 25 was not intended to apply where a petition had been presented in breach of the moratorium and therefore it followed that the administrators' appointment had not been invalidated.