In re Ayala Holdings Ltd (No 2): ChD 1996

The Court was asked as to an assignment to a creditor of all rights to and choses in action relating to or in any way arising out of or in connection with an action against a secured creditor. The rights purportedly assigned included the right to assert that certain dispositions of the company’s property after the commencement of the winding up were void under s.127 of the 1986 Act and that certain charges on the company’s property were void under s.395 Companies Act 1985 as against the liquidator for non-registration. The assignee argued that the assigned rights were property of the company which a liquidator can sell under para.6 of Sch.4.
Knox J asked what para.6 meant when it used the expression ‘property of the company’? He continued: ‘In my judgment [the assignee’s] argument overlooks one important distinction between property of the company, on the one hand, and the rights and powers of a liquidator on the other. The property of a company includes rights of action against third parties vested in a company at the commencement of the winding up and to that extent the principles in Ramsey v Hartley undoubtedly apply and such rights can, as I see it, be sold by a liquidator pursuant to para.6 of Sch.4. What is to be distinguished in my view are the statutory privileges and liberties conferred upon liquidators as such and indeed upon trustees in bankruptcy who are officers of the court and act under the court’s directions’.
Knox J referred to: ‘the fundamental distinction between assets of a company and rights conferred upon a liquidator in relation to the conduct of the liquidation. The former are assignable by sale under para 6 of Sch 4, the latter are not because in my view they are an incident of the office of the liquidator. The conclusion is, in my view, supported by the special status of the liquidator in company law.’
Knox J continued by referring to the powers of the liquidator under s.167 of the 1986 Act and said: ‘Now, if Mr Menzies is right in submitting that a liquidator can assign any of his powers the assignee, who is not a liquidator, would be free from any such control and I find it very difficult to envisage that Parliament could have contemplated that that was a permissible state of affairs.’
Knox J
[1996] 1 BCLC 467
Insolvency Act 1986 167
England and Wales
Cited by:
CitedLB Holdings Intermediate 2 Ltd, The Joint Administrators of v Lehman Brothers International (Europe), The Joint Administrators of and Others SC 17-May-2017
In the course of the insolvent administration of the bank, substantial additional sums were received. Parties appealed against some orders made on the application to court for directions as to what was to be done with the surplus.
Held: The . .

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Updated: 20 February 2021; Ref: scu.641432