Directors of a company in creditors’ voluntary liquidation sought to strike out an application by the liquidators seeking relief against them for wrongful trading and breach of fiduciary duty. They asserted that the liquidators’ application was procedurally irregular since it had been made by way of ordinary application, rather than by an originating application.
Held: The proceedings should have been started by originating application: ‘The practice of the court, as I understand it, is this. Where there has been a compulsory winding up, insolvency proceedings have started pursuant to which applications can be made by way of ordinary application. It is the practice to use ordinary applications where the relief being sought is relief particular to the liquidator or to the general body of creditors as represented by him. Thus, applications to set aside transactions for preference are normally brought where there is a compulsory liquidation by ordinary application. The position is different where, as here, the winding up is a creditors’ voluntary winding up. That, notwithstanding the submissions of Mr Atherton, is not, in my judgment, a proceeding so as to constitute an insolvency proceeding within r7. It does not seem to me that it is possible to say that where, in a creditors’ voluntary liquidation, an application in another matter has been made by way of originating application, all subsequent court proceedings can be commenced by ordinary application using the number which the first originating application has taken. It seems to me that in a creditors’ winding up, where it is intended to bring proceedings in a particular matter against particular respondents or defendants, an originating application should be issued. It is not without significance that the fee payable on a originating application is considerably greater than that on an ordinary application. These proceedings should have been commenced by originating application.’
Judges:
Evans-Lombe J
Citations:
[1988] 1 BCLC 583
Jurisdiction:
England and Wales
Cited by:
Cited – Quickson (South and West) Limited v Stephen Mark Katz, John Stephen Kelmanson (As Joint Liquidators of Buildlead Limited) ChD 25-Aug-2004
Various applications were made in the insolvency, including for removal of the liquidators and declarations that certain payments were a fraudulent preference on the creditors.
Held: No prejudice had been shown by any procedural irregularity. . .
Lists of cited by and citing cases may be incomplete.
Litigation Practice, Insolvency
Updated: 30 April 2022; Ref: scu.216395