Normally it is the Companies Court which deals with administration related applications.However in X-Fab Semiconductor Foundries AG v Plessey Semiconductors Limited [2014] EWHC 3190 (QB) (17 July 2014), the High Court has held that, in exceptional circumstances, the Queen’s Bench division can hear an application to permit creditor action against the assets of a company that was the subject of an out of court administration appointment. The creditor action in question was caught by the interim moratorium against creditor action imposed by paragraph 44 of Schedule B1 to the Insolvency Act 1986 (IA 1986).
In this case:
- The creditor action in question was obtaining possession of assets pursuant to an order made in ongoing proceedings in the Queen’s Bench division.
- The directors of the company filed their notice of intention to appoint administrators (which gave rise to the moratorium) the day before the creditor, ( whose proprietary right to the assets had been established in the Queen’s Bench proceedings and who had demonstrated significant financial disadvantage from the company’s failure to deliver up the assets) was entitled to enforce delivery up of the assets under the terms of the order in the Queen’s Bench proceedings.
Whilst the court acknowledged that Part 7 of the Insolvency Rules 1986 envisages that the Companies Court will deal with applications in insolvency proceedings (including administration), the court held that the High Court as a whole (and any division within it) had jurisdiction to hear the creditor’s application to lift the moratorium.
For the purpose of administration (and other corporate insolvency procedures), any court having jurisdiction to wind up the company was competent to hear applications arising (section 251, IA 1986). The High Court, as a whole, was given that jurisdiction (section 117, IA 1986).
This decision is the first reported instance of the Queen’s Bench making an order in relation to the administration moratorium. It is likely to be an exceptional case. In particular, it is notable that the order was made to support an order made in ongoing proceedings in the Queen’s Bench division.
If you have any queries on this or any other insolvency related matter please contact Rob Moore on 0114 218 4051 or rob.moore@tayloremmet.co.uk
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