Liquidators Appointment Valid Despite Failure to Notify QFCH

In the recent case of Bevan v Walker 2018 EWHC 265 CH in the High Court His Honour Judge Purle QC upheld the appointment of liquidators in an MVL despite the failure to notify HSBC.

The Company passed a special resolution in accordance with section 84(1) that it be wound up voluntarily. However, under section 84 (2A) and (2B), notice of the resolution must be given to any qualifying floating charge holder; and the resolution can only then be passed if 5 business days have expired or the QFCH has consented. Notice was not given to HSBC, there were some issues as to the enforceability of their charge.

The MVL was converted to a CVL and new liquidators were appointed, they sought directions as to the validity of the appointment of the MVL liquidators and their subsequent appointment. HSBC took no role in the application.

The judge found that notice to HSBC was factually required by section 84, despite its potential unenforceability. The object of the section was to enable the QFCH to intervene and appoint an administrator if they wished. However, the judge still found that once the resolution had been passed the effect was to put the company into MVL. He distinguished the cases on administrators appointment despite the clear similarities in the relevant provisions. The judge held that the QFCH had various remedies, it could issue a winding up petition; or seek to stay the winding up and appoint an administrator.

This pragmatic decision seems to fly in the face of similar cases involving the appointment of administrators, where failure to notify the QFCH does invalidate appointment. It, therefore, seems unlikely to me that it will be followed in the future, it merely muddles this area of law – which is crying out for certainty- still further.

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