Those of you who have read down this Blog far enough will know that well before a correspondent in Recovery magazine raised this issue, I had pointed out that there was a potential problem with filing papers at Companies House. I have made it a policy to look at an administration in nearly every visit I have done since I embarked on the Compliance On Call adventure. I have often found that filing dates are not being recorded on the case file. Given that the end of the administration, and therefore your release and appointment in any subsequent liquidation depends on this date, you must check with Companies House. A simple online history check will suffice. Such a check would have prevented problems in three of the cases I have seen so far, where documents essential to the appointment and release of an administrator were not filed or were filed too late. A careful reading of the new regulation 13 (used to be the ‘case record’) requirements also shows that you have to be able to retrieve the filing dates along with the other data that used to appear on the old regulation 17 record.
It is also essential to check that the right forms are filed. There are considerable similarities between the appointment forms in particular and it easy to confuse a ‘notice of intention to appoint’ for a ‘notice of appointment’ with potentially disastrous consequences. I reckon that any external review that spots such an error and gives you an opportunity to get it corrected is worth even my fees.
I also mentioned IVA’s in the title of this posting. The issue here is a problem with the courts, not with Companies House, but may have serious consequences as well. I have now noticed several times, mainly within the last year, that courts are sometimes taking an inordinate amount of time to formally file documents. I was told that when the new legislation sought to reduce the need for court hearings by introducing new filing requirements many courts could not handle the extra administrative burden. It may be mere gossip, but it was suggested to me that one county court was only dealing with insolvency filing at weekends if overtime was available to cover it. I don’t know how big this problem is, but I have seen several cases where nominee’s reports were filed late, as a result.
The main area for concern is that a nominee may not hold the meeting of creditors to approve the IVA at least 14 days after filing as required. Many of you leave 16 to 18 days from sending the report to court and others leave 20 to 25 days, but the legislation prevents you holding it beyond 28 days after filing, so you cannot set the date too far ahead. I have seen lot of cases where the filing date recorded by the court was a week or more after the papers were sent or even hand-carried to the court, with the result that the meeting was held too early. I have even seen one case where the court delayed over three weeks so that the meeting had been ‘held’ before the report was filed.
The impact of this depends, as so often in insolvency, on your interpretation of the legislation. Section 262(8) says that the arrangement is valid notwithstanding any technical problems with the meeting and may provide you with a ‘get out of jail free’ card, but there are two problems with this. Firstly, it is buried in a section about appealing the chairman’s decision at a meeting, so it may not have general application and may be limited to technical deficiencies in the chairman’s decision-making processes. Secondly, I think it would probably only apply to those meetings held after filing but within 14 days, as holding the meeting before the nominee’s report is even filed would be so fundamental that the courts would be unlikely to interpret it as a mere technicality.
The solution appears to be:
1) Set the meeting date 28 days from the day you send the report to court.
2) Check with the court that the report had been filed at least 14 days before the proposed meeting date.
3) Keep evidence of the filing date on file and add a line to your checklists to make sure that the meeting will be validly held.
4) If the court has filed it late, unless you have counsel’s opinion confirming that section 262(8) applies, seek approval from the court to hold the meeting notwithstanding the late filing.
The final point above should, logically, be approved by the court if you can show that creditors have received plenty of notice and that the court’s delay would add unnecessary cost to the proceedings if another meeting had to be convened. Unfortunately, I have used the words ‘court’ and ‘logically’ in the same sentence. I apologise.
If you have run into either of the above filing difficulties, please give me a call or email me. I would be interested to hear how you solved the problems caused, especially if your legal advice or the court’s ruling on the IVA issue made any reference to section 262(8).
