2 March 2017 by

Latest guidance for those seeking to restore a company to the register

The Court of Appeal has provided a useful explanation concerning limitation periods for bringing a claim, when restoring a company to the register.

Background

In 2001, Mr Davy, took advice from Heather Moor & Edgecomb Limited (“the company”), a firm of independent financial advisors. Following the advice, Mr Davy transferred £610,398 out of the British Airways pension scheme and into a personal pension plan. Transferring the pension plan was a costly mistake for Mr Davy. In 2012 the Financial Services Compensation Scheme estimated his loss to be £617,507 and he was offered the statutory maximum compensation of £50,000. Mr Davy accepted the offer in February 2013 (Mr Davy had realised in May 2012 that the company had been struck off).

In November 2013, Mr Davy applied for the restoration of the company. In Mr Davy’s application for restoration, he stated that he intended to issue proceedings against the company for damages and present a winding up petition.

Procedure to restore a company

Section 1003 Companies Act 2006, allows a company to make an application to be struck off the register of companies. Upon receipt of the application, the registrar will publish notice of the application in the Gazette. The registrar will not strike off the company until after the expiry of two months from the date of publication of the notice of the application (for applications made before 10 October 2015, the period is three months).

If a company is struck off the register, an application can be made by any person listed in section 1029(2) Companies Act 2006 to restore the company to the register. That includes any person with a potential legal claim against the company or any person who was a creditor of the company at the time the company was struck off.

When the court makes a decision to restore a company, it must have regard to its power under section 1032(3) to give directions and make provisions as seems just for placing the company and all other persons as close to the same position as if the company had not been dissolved or struck off the register.

Decision

At first instance, the High Court restored the company to the register and granted directions that the period between the company being struck off and the making of the restoration order did not count in relation to the time limit for commencing a claim for negligence. Further, the High Court ruled that a winding up petition would be deemed presented on the date the company was dissolved.

The company appealed the grant of the directions. The Court of Appeal set aside the previous decision and stated in order for the court to grant a direction on the issue of limitation, Mr Davy needed to show that he would probably have issued proceedings against the company during the period it was struck off. On the evidence, the Court of Appeal stated that Mr Davy could not show that.

If you have any questions regarding the above article or wish to discuss any insolvency issue, please contact one of our solicitors in the Dispute Resolution team here.

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