Article 7: Winding up of an insolvent partnership as an unregistered company on the petition of a creditor etc where no concurrent petition presented against a member
Article 7 applies Part V of The Act as amended by Schedule 3 of the IPO. Part V of The Act states that any unregistered company may be wound up as an unregistered company under The Act and all the provisions of The Act will apply, with certain exceptions and modifications, but none of those relate to closure.
As a result, you just close it like any company. There is, however, a problem with the legislation. The provisions of The Act include the requirement to give notice to The Registrar of Companies, but we don’t think that works.
If you submit the copy final account to the Registrar with form WU15 in the normal way, since it is an “unregistered” company and does not have a registered number you can enter, it will never be “delivered”, as Companies House will not, and cannot, accept it for filing, so there is no point in even trying. Instead, we think that you should place a note on file to say that you have not sent it and why. You should take your release from the date that the Court copy is deemed delivered to Court.
Article 8: Winding up of an insolvent partnership as an unregistered company on the petition of a creditor etc where concurrent petitions presented against one or more members
Article 8 applies Part V of The Act (other than sections 223 and 224) as amended by Schedule 4 of the IPO. Part V of The Act states that any unregistered company may be wound up as an unregistered company under The Act and all the provisions of The Act will apply, with certain exceptions and modifications, but none of those relate to closure. The amendments avoid the above problem with giving notice to Companies House but give rise to a different problem.
Paragraph 18 of Schedule 4 amends section 146 of The Act to state that where it appears to the responsible IP of an insolvent partnership that the winding up of the partnership is for practical purposes complete, the responsible insolvency practitioner must:
- Make up an account of the winding up, showing how it has been conducted and the property disposed of (see Rule 7.71);
- Send a copy of the account to the creditors of the partnership (other than opted-out creditors);
- Give the partnership’s creditors (other than opted-out creditors) a notice explaining the effect of section 174(4)(d) as amended by Schedule 4 of the IPO and how they may object to the liquidator’s release; and
- Within 7 days of the period beginning with the day after the last day of the period prescribed by the rules (8 weeks after delivery of the notice (Rule 7.71(2)(e))) send to the Court a copy of the account and a statement of whether any of the partnership’s creditors objected to the liquidator’s release.
Paragraph 21 of Schedule 4 modifies section 172, and states that the responsible IP who has produced an account of the winding up or administration under section 146 must vacate office immediately upon complying with the requirements of section 146(3) – that is when they have sent a copy of the account to the creditors and given them notice explaining the effect of section 174(4)(d). Contrast this with the normal position in a corporate winding up, where under section 172(8), the liquidator only vacates office after the final account has been filed at Companies House and the Court under section 146(4).
Paragraph 22 of Schedule 4 modifies section 174 of The Act to state that the IP who has vacated office under section 172(6) gets their release at the time that they vacated office i.e. when they have sent a copy of the account to the creditors, or, if any objections were received from creditors within the 8 week period the liquidator will need to apply to the Secretary of State for their release and they will get their release at such time as the Secretary of State may determine.
This means that the liquidator will not know whether they have had their release until the 8 weeks have expired and, if nobody has objected at that point, then the release is backdated to when they vacated office. In addition, the liquidator who is no longer in office must send a copy of their final account to the Court together with a statement as to whether any of the creditors objected to their release.
This means that you will not be able to release your bond until up to 9 weeks after you were actually released as liquidator. To cover this off for the benefit of the regulators you should prepare a file note to explain why this is the case.
Article 9: Winding up of an insolvent partnership as unregistered company on the petition of a member where no concurrent petitions presented against a member
Article 9 applies sections 117 and 221 of The Act as amended by Schedule 5 of the IPO and the other provisions of Part V of The Act as amended by Part 1 of Schedule 3 of the IPO. Section 221 of The Act as modified states that any unregistered company may be wound up as an unregistered company under The Act and all the provisions of The Act will apply, with certain exceptions and modifications, but none of those relate to closure.
As a result, you just close it like any company. As with an Article 7 winding up, the provisions of The Act include the requirement to give notice to the Registrar of Companies, but we don’t think that works.
If you submit the copy final account to the Registrar with form WU15 in the normal way, since it is an “unregistered” company and does not have a registered number you can enter, it will never be “delivered”, as Companies House will not, and cannot, accept it for filing, so there is no point in even trying. Instead, we think that you should place a note on file to say that you have not sent it and why. You should take your release from the date that the court copy is deemed delivered to court.
Article 10: Winding up of an insolvent partnership as unregistered company on a member’s petition where concurrent petitions presented against all members
Article 10 applies several sections of The Act as amended by Schedule 6 of the IPO, with the remaining provisions of Part V of The Act being as amended by Schedule 4 of the IPO. Part V as amended states that any unregistered company may be wound up as an unregistered company under The Act and all the provisions of The Act will apply, with certain exceptions and modifications, but none of those relate to closure.
As with an Article 8 winding up, paragraph 18 of Schedule 4 amends section 146 of The Act to state that where it appears to the responsible IP of an insolvent partnership, which is being wound up by Article 8 of the IPO, that the winding up of the partnership is for practical purposes complete, the responsible insolvency practitioner must:
- Make up an account of the winding up, showing how it has been conducted and the property disposed of (see Rule 7.71);
- Send a copy of the account to the creditors of the partnership (other than opted-out creditors);
- Give the partnership’s creditors (other than opted-out creditors) a notice explaining the effect of section 174(4)(d) as amended by Schedule 4 of the IPO and how they may object to the liquidator’s release; and
- Within 7 days of the period beginning with the day after the last day of the period prescribed by the rules (8 weeks after delivery of the notice (Rule 7.71(2)(e))) send to the court a copy of the account and a statement of whether any of the partnership’s creditors objected to the liquidator’s release.
Paragraph 21 of Schedule 4 modifies section 172, and states that the responsible IP who has produced an account of the winding up or administration under section 146 must vacate office immediately upon complying with the requirements of section 146(3) – that is when they have sent a copy of the account to the creditors and given them notice explaining the effect of section 174(4)(d). Contrast this with the normal position in a corporate winding up, where under section 172(8), the liquidator only vacates office after the final account has been filed at Companies House and the Court under section 146(4).
Paragraph 22 of Schedule 4 modifies section 174 of The Act to state that the person who has vacated office under section 172(6) as modified gets their release at the time that they vacated office i.e. when they had sent a copy of the account to the creditors, or, if any objections were received from creditors within the 8 week period the liquidator will need to apply to the Secretary of State for their release and they will get their release at such time as the Secretary of State may determine.
This means that the liquidator will not know whether they have had their release until the 8 weeks have expired and, if nobody has objected at that point, then the release is backdated to when they vacated office. In addition, the liquidator who is no longer in office must send a copy of their final account to the Court together with a statement as to whether any of the creditors objected to their release.
This means that you will not be able to release your bond until up to 9 weeks after you were actually released as liquidator. To cover this off for the benefit of the regulators you should prepare a file note to explain why this is the case.
Round-up
So, to boil the above detailed points down to the essentials:
Under articles 7 and 9, you will not be able to comply with the statutory requirement to “deliver” a copy of your closing notice to the Registrar of Companies, so you will have to make a note to justify the approach you take. We suggest using the date of deemed delivery to Court as your release date instead.
Under articles 8 and 10, you don’t have to deliver a copy to the Registrar, but the timing of the requirements mean that release is backdated to the start of the 8 weeks’ notice given at closure, so that you will only find out that you have been released over 8 weeks after the release date and will always have to release your bond late. All we can suggest is that you note the reasons and refer to the statutory provisions or this Blog.
Hopefully, the legislation will be amended in due course, but the current political shenanigans may reduce the chance of relatively minor legislative glitches being fixed for the foreseeable future.
