Chancery Guide 2002
Key Rules and PDs: PD 49 - Applications under the Companies Act; PD - Insolvency; Insolvency Rules 1986; Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987; PD - Directors Disqualification Proceedings
20.1 The Companies Court is a part of the Chancery Division. Applications in the High Court under the Companies Act 1985, the Insurance Companies Act 1982, the Insolvency Act 1986 in relation to companies registered in England and Wales, and the Company Directors Disqualification Act 1986, must be commenced in the Companies Court. Proceedings concerning insolvent partnerships, under the Insolvent Partnerships Order 1994, are also brought in the Companies Court (unlike proceedings against partners separately, which, if the partner is an individual, are brought in bankruptcy). Many other kinds of application are brought in the Companies Court. Appeals in Companies Court matters are dealt with in Chapter 10.
20.2 Applications, other than in insolvency, are governed by the Civil Procedure Rules and PD 49 - Applications under the Companies Act 1985.
20.3 Applications in insolvency relating to companies (and to insolvent partnerships) are governed by the Insolvency Rules and PD - Insolvency Proceedings.
20.4 Proceedings under the Company Directors Disqualification Act 1986 are governed by the Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules 1987 and the PD - Directors Disqualification Proceedings.
20.5 Proceedings in the Companies Court under a particular statute should be entitled accordingly, thus:
'In the matter of the Companies Act 1985 [and of any other statute as appropriate] And in the matter of [name and registration number of the company]'
'In the matter of the Company Directors Disqualification Act 1986 And in the matter of [name of the relevant company]'
'In the matter of the Insolvency Act 1986 [and of any appropriate order, such as the Insolvent Partnerships Order 1994] And in the matter of [name of the debtor]'
20.6 The Companies Court has a separate administrative procedure. Proceedings are issued in the Companies Court General Office, and they are dealt with by the Registrars.
20.7 Petitions for winding up, petitions for confirmation by the court of reduction of capital, and interim applications for directions in proceedings by shareholders are among the principal matters heard by the Registrars. A Registrar may direct that any case be heard by a Judge even if it is a kind of application which would normally be heard by a Registrar.
20.8 Certain matters such as petitions for an administration order under Part II of the Insolvency Act 1986, petitions for approval by the court of schemes of arrangement and applications for the appointment of provisional liquidators are heard by a Judge. A Judge is available to hear companies matters each day in term time, and applications to be heard by that judge may be listed for any such day. The Judge will normally also be hearing the Interim Applications List for the day, but one or more other judges may be available to assist if necessary.
20.9 Paragraphs 7.39 to 7.45 apply to hearings before the Registrars of the Companies Court. Skeleton arguments and bundles should be delivered to the Companies Court Issue Section.
20.10 An administration order is an order directing that, during the period for which the order is in force, the affairs, business and property of the company are to be managed by a person ('the administrator') appointed for the purpose by the court. A company or its directors or a creditor may apply to the court for an administration order. The court may make an administration order if it is satisfied that the company is or is likely to become unable to pay its debts and considers that the making of the order would be likely to achieve one or more of the following purposes:
- the survival of the company and the whole or any part of its undertaking as a going concern;
- the approval of a voluntary arrangement;
- the sanctioning of a compromise or scheme of arrangement under section 425 of the Companies Act 1985; or
- a more advantageous realisation of the company's assets than would be effected on a winding up.
20.11 An application of administration order must be commenced by the prescribed form of petition. The petition should be listed before a Judge (see 20.8 above).
20.12 Administration orders are sometimes made for a specifically limited time, or subject to a requirement that the administrator apply to the court for directions, or report to the court, by a given date. If the order is limited in time, the administrator may apply for it to be extended. If the application is made sufficiently in advance of the date when the order would otherwise expire, it may be dealt with on paper, unless the judge considers that a hearing is needed. If the order requires a written report to the court, it may specify that the report is to be addressed to the Judge making the order. Once the judge has considered any such report it will be placed on the court file.
20.13 Practice Statements explain the extent to which the proposed administrator must comply with the reporting requirement of Rule 2.2, Insolvency Rules 1986, and the circumstances in which information in the report may be withheld from creditors: see Practice Statements (Administration Orders: Reports) dated 17 January 1994 and 15 April 2002, printed at [1994] 1 W.L.R. 160 and [2002] 1 W.L.R. 1358.
20.14 A scheme under section 425 of the Companies Act 1985 can be proposed whether or not a company is in liquidation. It is necessary to obtain the sanction of the Court to a scheme which has been approved by the requisite majority of creditors of each class at separately convened meetings directed by the Court. If the company is insolvent the objective of the scheme can be more simply and economically achieved by a company voluntary arrangement under Part I of the Act. However, a scheme under section 425 has the advantage that the Court may approve the distribution of assets otherwise than in accordance with creditors' strict legal rights.
20.15 The petition may be listed before either the Judge or a Registrar, but petitions in respect of substantial schemes will be listed before a Judge.
20.16 A Practice Statement sets out the procedure to be followed in respect of any issues which may arise as to the constitution of meetings of creditors or which otherwise affect the conduct of those meetings: Practice Statement (Companies: Schemes of Arrangement) dated 15 April 2002, printed at [2002] 1 W.L.R. 1345.
20.17 Proceedings to wind up a company are commenced by presenting a petition to the court. The presentation of a winding up petition can cause substantial damage to a company. A winding up petition should not be presented when it is known that a debt is disputed in good faith. Practitioners should make reasonable enquiries from their client as to the existence of any such dispute. The court may order a petitioner to pay the company's costs of a petition based on a disputed debt on the indemnity basis.
20.18 When a winding up petition is presented to either the Companies Court, a Chancery District Registry or a county court having jurisdiction, particulars including the name of the company and the petitioner's solicitors are entered in a computerised register. This is called the Central Registry of Winding Up Petitions. It may be searched by personal attendance at the Companies Court General Office, or by telephone on 020 7947 7328.
20.19 The requirement to advertise the petition (Insolvency Rule 4.11(2)(b)) is mandatory, and designed to ensure that the class remedy of winding up by the court is made available to all creditors, and is not used simply as a means of putting pressure on the company to pay the petitioner's debt. Failure to comply with the rule, without good reason accepted by the court, may lead to the summary dismissal of the petition on the return date (Insolvency Rule 4.11(5)). If the court, in its discretion, grants an adjournment, this will be on condition that the petition is advertised in due time for the adjourned hearing. No further adjournment for the purpose of advertisement will normally be granted.
20.20 If an order is made restraining advertisement while an application is made to the court to stop the proceedings, the case is listed in the Daily Cause List by number only so that the name of the company is not given.
20.21 Petitions under the Companies Act 1985, section 459, are liable to involve extensive factual enquiry and many of the measures summarised in Section A of this Guide which are designed to avoid unnecessary cost and delay are particularly relevant to them.
20.22 Where applications are brought in the Companies Court and in a related case in the Chancery Division at the same time, special arrangements can be made on request to the Listing Officer for the applications to be heard by the same Judge.
20.23 Inspection of the court's records and the court file in any insolvency proceedings is governed by Insolvency Rules 7.28 and 7.31.
20.24 The following leaflets are available from the Companies Court General Office:
- Current Practice Directions and Practice Notes;
- 'I want to wind up a company: what do I do?'
- 'I want to restore a company's name to the Register: what do I do?'
- 'I want to apply to extend time for registration of a charge or to rectify a mis-statement or omission (in the registered particulars of a charge or of a memorandum of satisfaction): what do I do?'