Globespan Decision Upheld

The Manchester office of law firm, Irwin Mitchell, has welcomed a High Court decision to apply a judgment made earlier this year in relation to Globespan Airways Limited, to a case involving one of its clients.

In the case of Re Globespan - a business which went into administration in December 2009 - Mr Justice Briggs concluded earlier this year that the date for a company going into liquidation and the appointment of liquidators where that company was previously in administration is at the point when the 2.34B form is received by the Registrar of Companies, rather than when it is processed.

The case became high profile due to the potential impact it could have where a company’s administration lapses during the period when the form is sent and when it is registered by the Registrar.

The consequences where there is a such a ‘break’ are numerous and include control of the company falling back into the hands of the directors and, potentially of greater consequence to creditors, an impact on the definition of ‘relevant time’ under which to bring a claim under the Insolvency Act 1986 for a ‘preference’ or transaction at an undervalue’. In the case of Re Globespan, there was potentially a break of a number of months.

On 13 April 2012, the restructuring team at Irwin Mitchell’s Manchester office, were successful before His Honour Judge Hodge sitting as a High Court Judge, in having the Re Globespan applied.

His Honour Judge Hodge concluded that whilst the High Court was not technically bound by Mr Justice Briggs’ decision, he should follow the reasoned and argued decision unless he had reason to believe that the judgment was wrong or that it should not be followed, HHJ Hodge could see no reason to do so and in reaching his conclusion dismissed the Registrar’s application to stay proceedings pending the outcome of any appeal in Re Globespan .

The Registrar has applied for leave to appeal the Re Globespan case, but permission has not yet been granted and no date has yet been set. Until the case is appealed, and even then only if it is successfully, Re Globespan is decided law and should be applied by the Registrar - the date on which a company moves from administration to liquidation via the 2.34B form method will be the date on which the form is received at the Registrar.