B e f o r e :
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
| HOLDENHURST SECURITIES PLC
|- and -
|(1) MALCOLM COHEN (2) RAYMOND HOCKING
Mr. Lloyd Tamlin instructed by Herbert Smith for the Respondents
Hearing date: 3 March 2000
Crown Copyright ©
Mr. Justice Laddie:
"We write this letter to advise that we intend commencing proceedings for recovery of the inter-Company debt. Before such proceedings are issued, however, we must either have your consent alternatively leave of the Court pursuant to Section 11(3)(d) of the Insolvency Act 1986. Please advise whether you are prepared to consent to such proceedings being issued."
"For an Order in the following terms:
1. That it be declared that the debt of £885,553.00 owing from [Wimbledon] to [Holdenhurst] has not been extinguished; and
2. That the Respondents be directed to admit the said debt under the voluntary arrangement made in respect of the Company on the 19th April 1996; or
3. That leave be granted pursuant to section 11(3)(d) of the Insolvency Act 1986 for the [Holdenhurst] to bring proceedings against [Wimbledon] for a declaration as to the debt owing by [Wimbledon] to [Holdenhurst]..."
The Respondents' Application is to strike out or stay paragraphs 1 and 2. No attempt is made to prevent Holdenhurst continuing with paragraph 3 although the Respondents do and will contend that leave should not be granted.
The application to strike out
"During the period for which an administration order is in force -
(a) no resolution may be passed or order made for the winding up of the company;
(b) no administrative receiver of the company may be appointed;
(c) no other steps may be taken to enforce any security over the company's property, or to repossess goods in the company's possession under a hire-purchase agreement, except with the consent of the administrator or leave of the court and subject (where the court gives leave) to such terms as the court may impose; and
(d) no other proceedings and no execution or other legal process may be commenced or continued, and no distress may be levied, against the company or its property except with the consent of the administrator or the leave of the court and subject (where the court gives leave) to such terms as aforesaid."
"If any of the company's creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to court; and on the application the court may -
(a) confirm, reverse or modify any act or decision of the supervisor,
(b) give him directors, or
(c) make such other order as it thinks fit."
Mr. Brettler says that this section is of very great width. The Respondents, in their capacities as supervisors, have failed to allow Holdenhurst to advance it claim in the CVA and that amounts either to a decision of theirs or an omission by them of which Holdenhurst can complain.
"The width of the words of section 303 require the court to be cautious in allowing applications to be made against trustees in bankruptcy, remembering that the trustee in bankruptcy is, by definition, the trustee of an insolvent estate. It is the court's duty at all times to protect an insolvent estate against unnecessary expense. In my view, a wide discretion such as that conferred by section 303 should not be invoked lightly or without any proper and substantial cause. It follows that when a person comes before the court asserting, but offering no evidence beyond assertion, and without means of proving that he is a beneficiary with an interest, the court is entitled to question the substance of the alleged interest, which here may very probably be no more than a hope of being considered. When the applicant does not seek to have any act of the trustee set aside but to have declarations of right which substantially affect persons other than the trustee, notably, of course, the trustee of the settlement, as opposed to the trustee in bankruptcy, the court should be careful not to allow these wide words to be invoked so as to cause expense to the estate on a claim which the court can see is likely to be fruitless."
The application for a stay