[CHANCERY DIVISION]

In re INTERNATIONAL BULK COMMODITIES LTD.

[No. 002090 of 1992]

Insolvency - Receivership - Unregistered company - Bank appointing receivers under terms of debenture with foreign company - Whether "administrative receiver" of "company" - Insolvency Act 1986 (c. 45), s. 29(2)¹ - Companies Act 1985 (c. 6), s. 735(1)(4)²

A company which traded worldwide was incorporated and registered overseas. Its sales operations in the United Kingdom were controlled by one of its directors. In April 1989 the company granted a debenture in English form to a bank by way of a first fixed charge over its real property and book debts, and a first floating charge over all its assets past and future. The debenture included a common form power to appoint a receiver and manager over the assets charged in the event of the company's failure to make payment of the sums secured on demand by the bank. The clause provided that the receiver should have various powers "in addition to the powers conferred by section 109 of the Law of Property Act 1925 and in the case of a receiver who is an administrative receiver within the meaning of section 29 of the Insolvency Act 1986 without limiting the powers in Schedule 1 to that Act." In October 1991 the company ceased trading in the United Kingdom and its business, assets and liabilities there were transferred to a United Kingdom company. In February 1992, following the company's failure to repay the sums secured on demand, the bank appointed receivers pursuant to the debenture.

On the receivers' application to determine whether receivers appointed over the property of an unregistered company were administrative receivers within the meaning of section 29(2) of the Insolvency Act 1986: -

Held, that, since in Part III of the Insolvency Act 1986 there was no definition of "company" in relation to administrative receivers, by virtue of section 251 of that Act the definition in section 735 of the Companies Act 1985 applied and, therefore, unless the contrary intention appeared, "company" was to be defined as a company registered under the Companies Acts; but that a contrary intention was to be deduced from the proper construction of the provisions relating to administrative receivers generally and the Act of 1986 as a whole, whereby it appeared that Parliament intended that "company," in the context of section 29(2)(a), should not be confined to the prima facie meaning of companies registered under the Companies Acts but should embrace unregistered companies liable to be wound up under Part V of the Act of 1986; and that, accordingly, the applicants were administrative receivers within the meaning of section 29(2) (post, pp. 84H-85A, F-G, 87A-E, 90A-C).

Per curiam. A decision that a receiver appointed over the property of an unregistered company is an administrative

1 Insolvency Act 1986, s. 29(2): see post, p. 84G-H.

2 Companies Act 1985, s. 735(1)(4): see post, p. 85B, D.

receiver for the purposes of the Insolvency Act 1986 is consistent with the provisions of the Company Directors Disqualification Act 1986 (post, p. 89D).

The following cases are referred to in the judgment:

Anchor Line (Henderson Brothers) Ltd., In re [1937] Ch. 483

Atlantic Computer Systems Plc., In re [1992] Ch. 505; [1992] 2 W.L.R. 367; [1992] 1 All E.R. 476, C.A.

Felixstowe Dock & Railway Co. v. United States Lines Inc. [1989] Q.B. 360; [1989] 2 W.L.R. 109; [1988] 2 All E.R. 77

Law Society v. United Service Bureau Ltd. [1934] 1 K.B. 343, D.C.

The following additional cases were cited in argument:

Barrow Borough Transport Ltd., In re [1990] Ch. 227; [1989] 3 W.L.R. 858

Company (No. 00359 of 1987), In re A [1988] Ch. 210; [1987] 3 W.L.R. 339; [1987] 3 All E.R. 137

Eurostem Maritime Ltd., In re, 1987 P.C.C. 190

Meadrealm Ltd. v. Transcontinental Golf Construction (unreported), 29 November 1991, Vinelott J.

APPLICATION

By an application dated 26 February 1992 Philip Rodney Sykes and John Roger Hill of Binder Hamlyn, appointed receivers pursuant to a facility letter dated 15 May 1990 and a debenture dated 28 April 1989 made between the respondent, International Bulk Commodities Ltd. of 80, Broad Street, Monrovia, Liberia, and the Swiss Bank Corporation, sought, inter alia, a declaration on the question whether they were administrative receivers within the meaning of section 29(2) of the Insolvency Act 1986 or receivers whose powers were limited to those conferred by the debenture.

The facts are set out in the judgment.

Gabriel Moss Q.C. and Susan Prevezer for the applicants. In deciding whether the definition of "administrative receiver" in section 29 of the Insolvency Act 1986 applies to foreign registered companies the issue is whether "company" in section 29(2) extends to companies which the courts have jurisdiction to wind up. There is no express definition of "company" in the Act of 1986 but the definition of "company" in section 735 of the Companies Act 1985 applies (see section 251 of the Act of 1986), namely, an English or Scottish company "unless the contrary intention appears." Such contrary intention does appear for the following reasons.

(1) In relation to the qualifications of insolvency practitioners (including administrative receivers), section 388(4) of the Act of 1986 defines "company" as meaning a company within the meaning of section 735(1) of the Act of 1985 or a company which may be wound up under Part V of the Act of 1986. That includes all foreign corporations with a substantial United Kingdom connection. [Reference was also made to sections 230(2) and 389 of the Act of 1986 and Lingard, Bank Security Documents, 2nd ed. (1988), p. 77.]

(2) Parliament made a fundamental reform by introducing the concept of an administrative receiver and there is no good reason why that concept should not apply to a foreign registered corporation. [Reference was made to sections 9(3), 15, 43, 230-236 of, and Schedule 1 to, the Act of 1986; the Report of the Review Committee on Insolvency Law and Practice (1982) (Cmnd. 8558) and In re Atlantic Computor Systems Plc. [1992] Ch. 505.] The provisions of sections 230 to 236 of the Act of 1986 are new in relation to administrative receivers and since the purpose of the statute is to assist administrative receivers to run the company for the benefit of the secured and unsecured creditors it appears that Parliament did not intend to differentiate between English and foreign registered companies. Administrative receivers' powers under Schedule 1 to the Act of 1986 are as wide as those of administrators. That is an important reform enabling maximum realisations. Administrative receivers, unlike ordinary receivers, are able to ask the court to sell assets free of charges: see section 43.

(3) Although there is no definition of "company" in section 40, the context requires that a company should include a foreign registered company; otherwise holders of a floating charge could avoid payment of preferential creditors. In every case a receiver appointed under a floating charge in respect of the whole or substantially the whole of the company's property is a qualifying administrative receiver: see Meadrealm Ltd. v. Transcontinental Golf Construction (unreported), 29 November 1991.

(4) It is anomolous if there can be administration orders in respect of foreign companies (see section 8 of the Act of 1986) but there cannot be administrative receivers in respect of those companies. There is no reason why place of registration should make a difference to the statutory goals. Administration orders are meant to be a beneficial alternative to winding up: see In re Barrow Borough Transport Ltd. [1990] Ch. 227, 235B-C. Winding up is generally available for foreign companies provided that some connection can be shown with the jurisdiction: see In re A Company (No. 00359 of 1987) [1988] Ch. 210.

(5) It is sensible to read "company" as including "foreign companies" in a number of sections in the Act of 1986: see sections 30, 31, 33-39, 41, 46, 47; and contrast sections 495 and 496 of the Companies Act 1985.

(6) Section 300 of the Act of 1985 appears to apply to foreign companies: see In re Eurostem Maritime Ltd., 1987 P.C.C. 190, 192. Section 22(2) of the Company Directors Disqualification Act 1986 also applies to every English, foreign or Scottish company. These and similar statutory provisions must be read together with the Insolvency Act 1986.

Patrick Eccles Q.C. for the respondent. The applicants' argument is based largely on policy grounds, namely, that the advantages of including oversea companies in the statutory scheme, and the disadvantages of excluding such companies from the scheme, are so clear that Parliament must have indicated a contrary intention in section 735(4) of the Companies Act 1985. The applicants are unable to cite any authority or textbook which adverts to the alleged problems or anomalies which would arise if section 735(1)(a) were applied, nor can any textbook be

cited in support of their construction of "company," apart from the reference in Lingard, Bank Security Documents, p. 77.

Halsbury's Statutes, 4th ed., vol. 4 (1991), pp. 753-754 defines "company" in section 29(2) of the Insolvency Act 1986 in accordance with the prima facie meaning provided by section 735(1)(a) of the Act of 1985. In Felixstowe Dock & Railway Co. v. United States Lines Inc. [1989] Q.B. 360 it was accepted that Part II of the Act of 1986 did not apply to oversea unregistered companies. The scheme of the Act of 1985 is such that where Parliament intended its provisions to apply to oversea or unregistered companies it made express provision to that effect: see sections 72 to 79, 305(2)(b), 453, 691-703, 703A, 705(5)(a), 714(1)(b), 745(1). Similarly, in the Act of 1986, where Parliament intended its provisions to apply to oversea or unregistered companies it made express provision: see sections 221, 225, 229(2), 441.

Parliament expressly provided that in Scotland administrative receivership should extend to unregistered, including oversea, companies which may be wound up by the court: see sections 51(1) and 70 of the Act of 1986. In Scotland all receiverships are statutory in origin and there are no common law powers enabling debenture holders to appoint receivers, so it made sense to have extended the statutory scheme of the Act of 1986 to the existing legislation. In England Parliament may well have concluded that the existing powers of receivers in relation to unregistered companies were adequate.

The Company Directors Disqualification Act 1986 does not assist the applicants. Section 22(2)(b) of the Act expressly defines a "company" to include a company which may be wound up under Part V of the Insolvency Act 1986. That is consistent with the scheme of the Companies Act 1985 and the Insolvency Act 1986 that the prima facie meaning of "company" applies unless there is an "express" provision to the contrary.

The applicants further rely on section 30 of the Insolvency Act 1986 in saying that it is illogical that an oversea company should not be disqualified from appointment as receiver or manager. That is misconceived because section 740 of the Act of 1985 includes an oversea company in the definition of a "body corporate."

The applicants also rely on the definition of "company" in sections 388 and 389 of the Insolvency Act 1986 in relation to the qualifications for acting as an insolvency practitioner. Although an unregistered company may have an administrative receiver, the definition in section 388(4) cannot alter the meaning of "company" in the legislation of England and Wales relating to such receivers because section 388 covers insolvency practitioners in Scotland as well, where express provision has been made in Chapter II of Part III for the appointment of administrative receivers and so specific provision for the qualification of insolvency practitioners has to include administrative receivers of unregistered companies in that jurisdiction.

The authorities cited by the applicants do not assist for it is unlikely as a matter of policy that Parliament intended an unspecified variety of unregistered companies to be covered by section 29 of the Insolvency Act 1986 but made no express provision to that effect, particularly

where the scheme of the Act involved criminal penalties being exacted for breaches of various obligations on the part of office holders and directors: see Schedule 10. The court should lean against the application of criminal sanctions by implication in the case of oversea or unregistered companies. Whatever the merits of applying the regime of administrative receivership to oversea companies, the court cannot exclude the possibility that Parliament was content with the common law powers of receivers in England and Wales or simply overlooked the benefits urged by the applicants.

15 April. MUMMERY J. read the following judgment. This application poses a difficult question of general importance on the scope of the provisions in the Insolvency Act 1986 concerned with administrative receivers. Do those provisions apply in the case of a foreign company? More precisely, do they apply to a receiver of the whole, or substantially the whole, of the property of a foreign company appointed by or on behalf of the holders of debentures of the company secured by a charge which, as created, was a floating charge?

The question has arisen in the following way. The respondent company, International Bulk Commodities Ltd. ("I.B.C."), was not formed or registered under the Companies Acts. It was incorporated in 1988 in Liberia. Its registered office is in Monrovia. I.B.C. trades worldwide buying and selling basic commodities such as timber, coal and cement. In the United Kingdom I.B.C.'s sales operations were based in Newbury and were controlled by one of the directors, Mr. Stuart Thornhill. The other three directors of I.B.C. are resident abroad.

On 26 October 1991 I.B.C. ceased trading in the United Kingdom. Its business, assets and liabilities in the United Kingdom were transferred to the Portland Cement Co. Ltd. While it was still trading in the United Kingdom I.B.C. granted a debenture, dated 28 April 1989, to the Swiss Bank Corporation ("the bank"). By way of continuing security for the payment and discharge of all moneys and liabilities owing by I.B.C. to the bank, I.B.C. granted a first fixed charge over its freehold and leasehold property and book debts, and a first floating charge over all its assets, undertaking and property, past and future. The debenture was in a form familiar to English lawyers, bankers and businessmen. It included a common form power in clause 12 to appoint a receiver and manager of the property charged in the event of failure to make payment of sums secured in accordance with the demand of the bank. The clause provided that the receiver so appointed should have various powers:

"in addition to the powers conferred by section 109 of the Law of Property Act 1925, and in the case of a receiver who is an administrative receiver within the meaning of section 29 of the Insolvency Act 1986, without limiting the powers in Schedule 1 to that Act."

On 15 May 1990 a facility letter was issued by the bank to I.B.C. up to a maximum sum of £2m. On 4 February 1992 the bank terminated

the facility and demanded payment of the sum of £879,026\73. No payment was made. On 7 February 1992 the bank purported to appoint Mr. Philip Sykes and Mr. John Hill of Binder Hamlyn as receivers pursuant to the debenture. I.B.C. disputes the bank's right to appoint receivers, but no step has been taken to challenge the validity of their appointment. Both parties have invited this court to proceed on the basis that the validity of the appointment is not and cannot be disputed or decided on this application.

The dispute on this application is whether the receivers, who are the applicants, are "administrative receivers" within the meaning of the Insolvency Act 1986, or are simply contractual receivers appointed out of court with powers limited to those contractually conferred by the terms of the debenture. The applicants wish to know the nature and extent of their receivership powers as a matter of practical importance and pressing nature, because they have been unable so far to obtain any assistance from the directors of I.B.C. as to the location of books and records of I.B.C., or as to the provision of information about its assets. The applicants contemplate use of the procedures in sections 234 to 236 of the Act of 1986 for the purpose of obtaining information, but those powers are only available to the applicants if they are "office holders," a term defined as including administrative receivers: see section 234(1) of the Act of 1986.

On 26 February 1992 an application was issued for the determination of that question. Paragraph 1 of the application seeks a declaration:

"as to whether the applicants appointed pursuant to a facility letter dated 15 May 1990 and a debenture dated 28 April 1989 made between the respondent and the Swiss Bank Corporation are administrative receivers within the meaning of section 29(2) of the Act of 1986, or are receivers whose powers are limited to those conferred by the said debenture."

I should mention other relevant matters before I refer to the statutory provisions.

(1) It is not argued that under English company law, or under the English law of mortgage, a foreign company, that is a company not formed and registered under the Companies Acts, lacks the requisite legal capacity to enter into a debenture secured by a floating charge on property both in England and abroad and conferring a power to appoint a receiver and manager over the whole, or substantially the whole, of its property. There is no evidence that the law of the place of incorporation of I.B.C., Liberia, impinges on these points so as to incapacitate I.B.C. in any relevant way.

(2) It is not disputed that the debenture, including the fixed and floating charge created by it, is to be construed according to English law which draws no distinction, in the case of an English company at least, between property located within and property located outside the United Kingdom: see In re Anchor Line (Henderson Brothers) Ltd. [1937] Ch. 483, 487, 488. It is not argued that any system of law other than English law applies to determine the legal status of the receivers appointed by the bank pursuant to the debenture.

(3) As an "unregistered company," I.B.C. is amenable to the jurisdiction of the English court to wind up unregistered companies under Part V of the Act of 1986, though it may not be wound up voluntarily under that Act: see section 221(4). In this judgment I shall use the expression "unregistered company" to mean any company which is liable to be wound up under Part V of the Act of 1986.

(4) The question for decision is one of construction of the Act of 1986 and is not covered by any previous authority.

Before I refer to the particular provisions dealing with administrative receivers, I should also say something about the statutory background to the provisions and the evident purpose of the innovation of the concept of an administrative receiver.

In In re Atlantic Computer Systems Plc. [1992] Ch. 505, 524 the Court of Appeal summarised the background to the provisions of the Act of 1986 relating to receivers:

"Typically, when lending money to a company, a bank will take as security a charge over all or most of the assets of the company, present and future, the charge being a fixed charge on land and certain other assets, and a floating charge over the remaining assets. The deed authorises the bank to appoint a receiver and manager of the company's undertaking, with power to carry on the company's business. Such a receiver is referred to in the Act of 1986 as an 'administrative receiver.' "

Subject of course to the wording of the particular statutory provisions, those general observations are as pertinent to the case of a security granted to a bank by an unregistered company as to a security granted by a company formed and registered under the Companies Acts. It was also noted by the Court of Appeal, at p. 379C, that the Report of the Review Committee on Insolvency Law and Practice (1982) (Cmnd. 8558) under the Chairmanship of Sir Kenneth Cork considered that the power, contained in any well-drawn floating charge, to appoint a receiver and manager of the property and undertaking of a company had been of outstanding public benefit. A significant number of companies had been forced into liquidation, and potentially viable businesses capable of being rescued had been closed down, for want of such a floating charge. The Act of 1986 built on the foundations of the typical debenture by providing in Part III for administrative receivers and in Part II machinery for the making of administration orders intended to be used as a statutory alternative to an administrative receiver by filling

"the lacuna perceived to exist in the case of insolvent companies where either there is no floating charge or the holder of the floating charge does not appoint an administrative receiver:" see p. 379E.

Once appointed an administrative receiver has "all the powers normally conferred upon a receiver and manager appointed under a floating charge" (see p. 379D), though, as was recognised in that case, there are features distinguishing administration from administrative receivership.

It appears from these general observations, and from the detailed provisions of the Act of 1986, that Parliament intended to promote two

purposes relevant to receivers appointed by debenture holders. First, Parliament gave statutory recognition and reinforcement to the existing regime of contractual receivers appointed by debenture holders which had operated for the public benefit. It conferred the statutory status of administrative receiver in those cases where the receiver had been appointed by or on behalf of the debenture holder over the whole, or substantially the whole, of the company's property. The Act of 1986 contains provisions relating to many different aspects of receivership, all designed to improve the efficacy of the contractual machinery and to protect the interests of those affected by the receivership. There are provisions relating to qualification for office, and to appointment and vacation of office; and to many express powers, duties, rights and liabilities additional to those expressed in the debenture. There are additional administrative functions, such as the submission of a statement of affairs and the making of reports on specified matters.

Particular reference was made in argument to sections 42 to 49 and sections 230 to 237, and to the powers of an administrator or administrative receiver as set out in Schedule 1 to the Act of 1986.

Secondly, Parliament provided machinery for administration in the situation where the power to appoint a receiver does not exist, or where the power does exist but has not been exercised, or where the power has been exercised, but the person by whom or on whose behalf the receiver has been appointed consents to an order being made. There is jurisdiction to make an order in the terms of an administration order, available as an alternative to administrative receivership, and also available as an alternative to liquidation: see the provisions of sections 9, 10 and 11 of the Act of 1986.

Administrative receivership has to be viewed in the context of the whole range of remedies now available in situations where a company is, or is likely to become, unable to pay its debts. The changes made by the Act provide both greater flexibility and increased protection for those affected by actual or potential insolvency situations.

Against that general background I now consider the detailed statutory provisions relating to administrative receivers. Section 251 of the Act of 1986 is a definition section. It provides:

"In this Group of Parts, except in so far as the context otherwise requires . . . 'administrative receiver' means - (a) an administrative receiver as defined by section 29(2) in Chapter I of Part III . . ."

Section 29(2) is another definition in these terms:

"In this Chapter" - which concerns receivers and managers in England and Wales - "'administrative receiver' means - (a) a receiver or manager of the whole (or substantially the whole) of a company's property appointed by or on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge, or by such a charge and one or more other securities; . . ."

The crucial question is, what is a "company" for the purposes of section 29(2)? There is no definition of a company for this purpose either in

section 29 or in section 251. It is necessary to look at the words which appear at the foot of the defined expressions in section 251. Those words read:

"and any expression for whose interpretation provision is made by Part XXVI of the Companies Act, other than an expression defined above in this section, is to be construed in accordance with that provision."

I turn to Part XXVI of the Companies Act 1985. In section 735(1) the following definition appears: "In this Act - (a) 'company' means a company formed and registered under this Act, or an existing company; . . ." The section defines an "existing company" as meaning a company formed and registered under the former Companies Acts.

If that were the end of the matter, as I.B.C. submits it is, the solution to the problem would be simple. I.B.C. is not a company within that definition. The applicant receivers are not, therefore, administrative receivers within the meaning of section 29(2) of the Act of 1986 and they do not have the powers of office holders which they wish to use. The matter does not, however, stop there because section 735(4) of the Act of 1985 provides: "The definitions in this section apply unless the contrary intention appears." An intention to displace the prima facie or primary meaning of the defined statutory term may appear in a number of ways. The intention may appear from an express definition in different terms made for the purpose of a particular section or group of sections. See, for example, the definition of a company in section 388(4) of the Act of 1986 to which I shall return. There is no different express definition of "company" for the purposes of administrative receivership provisions generally.

A contrary intention may also appear from the subject matter and manifest purpose of the relevant provisions when construed in the context of both the immediately relevant provisions and of the Act as a whole: see, for example, Law Society v. United Service Bureau Ltd. [1934] 1 K.B. 343, 347, 348.

The relevant question is therefore: is there any indication in the subject matter and statutory purpose of the provisions concerning administrative receivers generally, or in the Act of 1986 considered as a whole, from which it appears that Parliament intended that the word "company" in the context of section 29(2)(a) of that Act should not be confined to its prima facie meaning of a company formed and registered under the Companies Acts, but should also embrace unregistered companies liable to be wound up under Part V of the Act of 1986?

In my judgment, there are indications that the provisions relating to administrative receivers generally apply both to companies formed and registered under the Companies Acts and to unregistered companies liable to be wound up under Part V. The starting point is that the legislative concept of administrative receiver, and the statutory scheme of the provisions relating to his qualifications, functions, powers and duties, all rest on a contractual base, namely, a receiver appointed by or on behalf of debenture holders under a debenture secured by a floating charge. Every administrative receiver is born in this way. As already

noted, the underlying contractual regime is applicable both in the case of a debenture granted by a company formed and registered under the Companies Acts, and in the case of a debenture granted by an unregistered company. The general purpose and scheme of the statutory superstructure is to strengthen and build on the continuing contractual foundation for the greater benefit of all affected - the company, the contributories, the creditors, both secured and unsecured, and the preferential creditors, as well as the public generally. The attainment of that general purpose and the nature of the scheme are prima facie as appropriate to the case of an unregistered company as they are to the case of a registered company.

Why should the range of companies affected by the statutory scheme of administrative receivers not be co-extensive with the range of companies affected by the underlying contractual receivership regime? Why should a receiver appointed over the property of a registered company and a receiver appointed over the property of an unregistered company under the same form of debenture and by the same debenture holder not both fall within the definition of an administrative receiver? It makes no sense to confine the purpose and scheme of administrative receivership to appointments of receivers made over the property of registered companies.

The foreign element is of no particular relevance where the company in question has granted a debenture secured by a floating charge in the English form. Both registered and unregistered companies may engage in activities both in England and abroad. Both may conduct business in England and abroad. Both may have creditors in England and abroad. Both may have assets located in England and abroad. Both may have directors resident in England and abroad. Both are liable to be wound up by the English court.

Why, for example, should the contributories and creditors of an unregistered company be denied the protection, enjoyed in the case of a registered company, of those provisions which require a receiver to be a licensed insolvency practitioner? In fact, Parliament recognised this particular problem and expressly dealt with it in section 388 in the definition of the expression "acting as an insolvency practitioner" in relation to the need for qualifications and the consequences of acting without those qualifications.

Section 230(2) of the Act of 1986 provides that, where an administrative receiver of a company is appointed, he must be a person who is qualified to act as an insolvency practitioner in relation to that company. Section 388(1) of the Act of 1986 provides:

"A person acts as an insolvency practitioner in relation to a company by acting - (a) as its liquidator, provisional liquidator, administrator or administrative receiver . . ."

Section 388(4) then provides:

"In this section - . . . 'company' means a company within the meaning given by section 735(1) of the Companies Act or a company which may be wound up under Part V of this Act (unregistered companies); . . ."

In my view, that provision lends support to the view that a receiver appointed over the property of an unregistered company may be regarded as an administrative receiver within the meaning of the Act of 1986. In that capacity he would be acting as an insolvency practitioner and must be qualified so to act.

In my judgment, the court should construe the relevant provisions, where the wording so permits, to promote and not to frustrate the evident legislative purpose, in this case reinforcing the position of contractual receivers. The express statutory definition of "company" is only its prima facie meaning, since it is expressly provided in section 735(4) of the Act of 1985 that the defined meaning may be displaced where a contrary intention appears. For the reasons I have stated above, a contrary intention does appear from the subject and the purpose of the provisions. The court should favour a construction which is consistent with and contributes to the smooth and efficient working of the contractual machinery recognised and reinforced by the legislation.

The position would, of course, have been plainer if Parliament had provided an expanded express definition of "company" for the purposes of the group of sections which relate to administrative receivers, such as was done in the case of section 388(4) of the Act of 1986, and was also done, for example, in section 22(2)(b ) of the Company Directors Disqualification Act 1986, where company is defined as including "any company which may be wound up under Part V of the Insolvency Act."

The absence of a different express definition of "company" in Part III of the Act does not, in my view, prevent the definition of section 735(1) of the Act of 1985 from yielding to a contrary intention. I rest my decision on this broad approach.

Mr. Moss, for the applicants, went through all the provisions of the Insolvency Act 1986 relating to administrative receivers. He also referred to provisions in the Company Directors Disqualification Act 1986 relating to administrative receivers, and to many other provisions in the Insolvency Act 1986 and in the Companies Act 1985 which might conceivably have some bearing on this question. I do not think that it is necessary to refer to all of those provisions because they really do not take the matter any further. It all comes back to the question of what meaning is to be given to the definition of "company" in the context in which it is used?

I will refer briefly to two particular aspects of his submissions. Extensive reference was made to the provisions in the Insolvency Act 1986 concerning administration orders and to the question whether they apply to the case of unregistered companies. Under section 8 the court has power to make an administration order in relation to a company if the court (a) is satisfied that the company is, or is likely to become, unable to pay its debts (within the meaning given to that expression by section 123 of the Act of 1986), and (b) considers that the making of an order under the section would be likely to achieve one or more of the specified purposes. An administration order is defined as

"an order directing that, during the period for which the order is in force, the affairs, business and property of the company shall be

managed by a person ('the administrator') appointed for the purpose by the court:" see section 8(2).

Is "company" in that context confined to a company formed and registered under the Companies Acts? Or does it extend to an unregistered company? If the court has power to make an administration order in relation to an unregistered company, that might strengthen the case for arguing that the provisions relating to administrative receivers should also apply to unregistered companies. Notice of a petition for an administration order must be served on any person who has appointed, or is or may be entitled to appoint, an administrative receiver of the company: section 9(2)(a). Where the court is satisfied that there is an administrative receiver of the company, the court must dismiss the petition unless it is also satisfied as to certain other matters which are referred to in section 9(3).

The position regarding administration orders over unregistered companies has not been finally settled by judicial decision. I was referred to the judgment of Hirst J. in Felixstowe Dock & Railway Co. v. United States Lines Inc. [1989] 1 Q.B. 360, 376 where the judge stated:

"It is not in dispute . . . (ii) that Part II of the Insolvency Act 1986 does not give the English court jurisdiction to make an administration order in respect of a foreign company."

I also note that Picarda, The Law Relating to Receivers, Managers and Administrators, 2nd ed. (1990), p. 501 expresses the editor's opinion as follows:

"An administrator is a creature of statute and is appointed over the affairs, business and property of a company falling within the definition of company in section 735 of the Companies Act 1985. This means that the company in question must be formed and registered under the Companies Act 1985 or under the former Companies Acts . . . What this means, in effect, therefore, in the context of private international law is that an administrator cannot be appointed over the affairs, business and property of an overseas company."

On the facts of this case it is not necessary for me to decide whether that view is right or wrong, and I should not decide it; the point should be left open for full argument in a case where it is necessary to the decision. I am unable to derive any assistance from the provisions relating to administrators on the question of administrative receivership. My only comment is that, if the position is that the court's power to appoint an administrator is in fact confined to companies formed and registered under the Companies Acts, it does not necessarily follow that the power to appoint an administrative receiver is similarly confined.

It is clear that not all the insolvency procedures are applicable to unregistered companies. Voluntary liquidation is not: see section 221(4). Further, the two remedies of administrative receiver and administrators are different in nature, though they may be similar in purpose. As already noted, the administrative receiver starts his life as a contractual appointee, though he occupies a position recognised and reinforced by

statute and may not be removed save by order of the court: section 45(1).

Administrators, on the other hand, are entirely the creatures of statute and it is possible that different considerations apply to administrators than apply to administrative receivers on the question of unregistered companies.

The second point, on which there was considerable discussion, concerns the provisions of the Company Directors Disqualification Act 1986. That makes use in a number of sections of the concept of administrative receiver. For example, in the definition of when a company becomes insolvent for the purposes of disqualification of unfit directors of insolvent companies: see section 6(2)(b ); and the application of the reporting provisions affecting administrative receivers as office holders in section 7(3)(d) and section 7(4).

The definition of "company" in section 22(2)(b ) of that Act includes any company which may be wound up under Part V of the Insolvency Act. Those companies are unregistered companies. That definition differs from that contained in section 735 of the Companies Act 1985, as applied to the provisions of the Insolvency Act 1986.

My only comment on the relevance of the Company Directors Disqualification Act 1986 is that a decision that a receiver appointed over the property of an unregistered company is an administrative receiver for the purposes of the Insolvency Act 1986 is consistent with, and does not create any particular difficulties in the operation of, the provisions of the Company Directors Disqualification Act 1986.

Mr. Eccles, for I.B.C., in addition to his emphasis on the definition in section 735(1) of the Companies Act 1985, referred to other specific provisions in the Insolvency Act 1986 in support of his submission that "company" should be given its prima facie and primary meaning in relation to the provisions governing administrative receivers. I single out three sections for special mention. He referred to section 70(1) which is the interpretation provision for a group of sections concerning receivers in Scotland. The definition of "company" for the purpose of those provisions is

"an incorporated company (whether or not a company within the meaning of the Companies Act) which the Court of Session has jurisdiction to wind up; . . ."

Mr. Eccles sought to contrast the presence of that definition in that group of sections with the absence of any such definition in relation to the administrative receivership group of sections in Part III to the Act of 1986.

He also referred to section 229(2) in the group of sections concerned with the winding up of unregistered companies. That provides:

"However, an unregistered company is not, except in the event of its being wound up, deemed to be a company under the Companies Act, and then only to the extent provided by this Part of this Act."

The third section to which he referred was section 441(2) which provides:

"Subject as above," - and subsection (1) deals with the fact that certain provisions extend to Northern Ireland - "and to any provision

expressly relating to companies incorporated elsewhere than in Great Britain, nothing in this Act extends to Northern Ireland or applies to or in relation to companies registered or incorporated in Northern Ireland."

I am unconvinced that these provisions, taken singly or cumulatively, show that there is a legislative intention to confine the status of an administrative receiver to a receiver appointed by debenture holders over property of a company formed and registered under the Companies Acts.

I conclude that I should grant a declaration as in the terms of paragraph 1 of the application, that is, that the applicants appointed pursuant to a facility letter dated 15 May 1990 and a debenture dated 28 April 1989 made between I.B.C. and the Swiss Bank Corporation are administrative receivers within the meaning of section 29(2) of the Insolvency Act 1986.

I have already, before delivering this judgment, heard argument about the precise form of the order. I have dealt with questions of costs and appeal and stay of the effect of the order pending an appeal.

Solicitors: Simpson Curtis, Leeds; Colin Bomer & Co., Newbury.

[Reported by IAN SAXTON ESQ., Barrister]