Deferral Of Dissolution

November 2007

Introduction 

1. What does “dissolution” mean?

The dissolution of a company ends its legal existence. Its property then either belongs to the Crown or more unusually, the Duchies of Cornwall or Lancaster, depending on the location of the company’s registered office. The dissolution of a company in liquidation will take place automatically three months after the Registrar of Companies (the Registrar) has received either:

a. a notice from the official receiver that the winding-up of the company is complete,

or

b. a notice from the insolvency practitioner liquidator that he/she has held a final meeting of creditors and enclosing an account of the winding up.

Where a company is not in liquidation and the Registrar has reason to believe that the company is not trading or operating it may be ‘struck off’ the Register of Companies and then dissolved. A court order is necessary to bring the company back into existence by declaring the dissolution void or restoring it to the Register.

2. What is "deferral of dissolution"?

A company should not be dissolved if there are certain matters still to be dealt with e.g. if there were to be legal proceedings against the company these would be seriously hindered if the company no longer existed. In the following situations the dissolution of the company would have to be deferred (postponed):

a. there is an administrative or Law of Property Act (LPA) receiver in office

b. there is a pension scheme which has not been finalised

c. the company is or will be the subject of prosecution or disqualification proceedings. 

3. What is an administrative receiver?

An administrative receiver is an insolvency practitioner who has been appointed by a debenture holder. A "debenture holder" is a special type of creditor of the company who holds a charge over its assets and as such, has the power to appoint an administrative receiver.

An administrative receiver is appointed to realise (sell) the company’s assets and pay the preferential creditors and the debenture holder’s debt.

4. LPA receiver?

An LPA receiver is appointed under the provisions of the Law of Property Act 1925 to sell land or property on behalf of a chargeholder. In such circumstances, the chargeholder will often be a bank. The official receiver must check that the charge is valid, that it has been registered properly and that the chargeholder has a right to sell the property. If so, the LPA receiver will retain his right to sell the property regardless of the winding-up order.

5. Official receiver’s application for release

(Amended March 2014)

When Estate Account and Insolvency Practitioner Services (EAIPS) in Birmingham, issues a certificate of release as liquidator to the official receiver, it also sends notice to the Registrar of Companies that the winding up is complete on form NOTCH (official receiver’s notice to Registrar of Companies of completion of winding up), and the Registrar will then proceed to dissolve the company three months after the release date

But, if a company has an administrative receiver, LPA receiver or company pension scheme administrator in office, the official receiver must take steps to ensure that the dissolution is "deferred".

The official receiver’s application for release need not be delayed - unless there is some prospect of surplus money from the administrative receiver becoming available for distribution, after the debenture holder has been paid. The official receiver can still apply for release but at the same time will apply to have the dissolution of the company deferred to allow the administrative receiver, LPA receiver or company pension scheme administrator enough time to complete his/her duties.  

6. Notice to administrative receiver, LPA receiver or company pension scheme administrator

In the first instance the official receiver should, before applying for release, write to any administrative receiver, LPA receiver or company pension scheme administrator who may still be in office on form RELADR (notice to an administrative receiver, LPA receiver or company pension scheme administrator), See Case Help Manual part Closing a Case (procedure- point 20).

This notice states that the official receiver intends to apply for release as liquidator and will apply to the Secretary of State for deferral of the dissolution of the company for two years from the date of his application for release.  

The official receiver will apply for dissolution to be deferred as part of the application for release, and the recipient is advised that should a further period of deferral of dissolution be required, it is their responsibility to make such an application to the Secretary of State (EAIPS) before the period expires. 

It is important that care is taken over the completion of form RELADR to ensure that books and papers are not destroyed in error.

7. Prosecution or disqualification proceedings

Where there is an outstanding prosecution or disqualification the dissolution should be deferred for six years.

8. Deferral of dissolution

Where the dissolution is to be deferred, EAIPS Birmingham will notify the relevant court and the Registrar of Companies that the Secretary of State directs that the dissolution of the company is to be deferred, and giving the date on which dissolution may commence, (unless a further direction is issued). EAIPS will save a copy of the ‘directions notice’ to the OR’s case file.

9. Destruction of books and papers

When applying for deferral of dissolution at the same time as applying for the official receiver’s release, care should be taken over any instruction to destroy books and papers to ensure that none are destroyed in error.

Notes:

  1. Although this CHM part refers to the official receiver’s application for release, it does not give detailed instructions on this procedure as this is dealt with in the Case Help Manual part: Closing a Case.
  2. The instructions given here are intended to provide further guidance only when the release application includes an application for deferring the dissolution of a company.

Where can I find out more?

Insolvency Act 1986 Section 205(3) – Deferral by Secretary of State

Insolvency Rules 4.224 and 4.225 – Dissolution after winding up

Companies Act 1985:

Chapter V1 Sections 651 to 658 – Matters subsequent to winding up

Technical Manual:

Chapter 37.8 to 37.10 – Release - Deferral of Dissolution

Chapter 38 – Dissolved Companies – Deferred Dissolution

Chapter 69 – Law of Property Act Receivers

Case Help Manual:

Closing a Case

Forms to be used:

(Amended April 2014)

DSNDIR – ‘OR’s application to Secretary of State for directions under s203/205’

NOTCH – ‘Notices to Companies House’

RELADR – ‘Liquidator (Release) – official receiver’s notice to administrative receiver, LPA receiver or company pension scheme administrator’

RELSSN, – Liquidator (Release) – Secretary of State’s notice to court of official receiver’s release as liquidator’ 

     

Deferral of Dissolution Flowchart 

 

Procedure

(Amended March 2014)

1. The procedure for deferring a dissolution is contained within the Case Help Manual part Closing a Case (procedure points 19, to 22.).