Jersey Unreported Judgments

Companies - application for orders that the Representors be wound up on a just and equitable basis.

[2023]JRC051

Royal Court

(Samedi)

29 March 2023

IN THE MATTER OF THE REPRESENTATIONS OF DAISY LOGISTICS MEZZ PLEDGECO LIMITED, DAISY STORES MEZZ PLEDGECO LIMITED AND DAISY STORES II MEZZ PLEDGECO LIMITED

AND IN THE MATTER OF ARTICLE 155 OF THE COMPANIES (JERSEY) LAW 1991

Advocate M. L. A. Pallot for the Representors.

judgment

the bailiff:

1.        This is an application by Daisy Logistics Mezz Pledgeco Limited, Daisy Stores Mezz Pledgeco Limited and Daisy Stores II Mezz Pledgeco Limited for orders that they be wound up on a just and equitable basis pursuant to Article 155 of the Companies (Jersey) Law 1991 ("the Law").

The background

2.        The background to this matter may be simply stated.  The Representor Companies were all incorporated in Jersey in August 2020 for the purpose of bidding for the acquisition of a retail chain.  The bid was unsuccessful and the Representors, together indeed with the rest of the holding structure put in place for that purpose, is now no longer required and accordingly have no purpose.

3.        Ordinarily, the Representors which have no assets or liabilities, and have never carried out any activity would have been summarily wound up.  However, by way of an oversight it appears that their own shareholders have themselves ceased to exist.  The Representors' direct shareholder has been dissolved as has, on the evidence before us, the company sitting above that, in and around February 2022.  Accordingly, even were it possible to reinstate the Representors' shareholders for the purposes of a summary winding up, it would be time-consuming, complex and costly to do so.  We are advised by Counsel that the only way that the dissolutions of the various levels of shareholder companies can be done is by an order of the English courts.

4.        The Companies take the view that they should not be allowed merely to fall away but should be wound up appropriately.

The Law

5.        Article 155 is in the following form:

"(1) A company, not being a company in respect of which a declaration has been made (and not recalled) under the Désastre Law, may be wound up by the court if the court is of the opinion that

(a) it is just and equitable to do so; or

(b) it is expedient in the public interest to do so.

...

(4) If the court orders a company to be wound up under this Article it may-

(a) appoint a liquidator;

(b) direct the manner in which the winding-up is to be conducted; and

(c) make such orders as it sees fit to ensure that the winding-up is conducted in an orderly manner."

6.        In the matter of Leveraged Income Fund Limited [2002] JRC 209, the Court, at paragraph 10, said this:

"10. Article 155 is based upon a similar provision of the Companies Act of the United Kingdom. English authorities are therefore of assistance. Although the English Courts have developed certain categories of cases where the Court will exercise its power under the just and equitable jurisdiction the Court is not confined to such categories. The words "just and equitable" are general words. As Palmer s Company Law Vol. 3 para 15.219 puts it:

"It has sometimes been suggested that there is an exhaustive list of situations that may fall within the scope of the "just and equitable" clause, but it now seems that although such classification may be convenient for purposes of presentation, the words "just and equitable" require a more flexible interpretation. In the words of Lord Wilberforce:

"Illustrations may be used, but general words should remain general and not be reduced to the sum of particular instances.""

7.        In Poundworld Limited [2009] JRC 042, the Court, at paragraph 15 said:

"15. We are of the view that the Court should be cautious before ordering a winding up under Article 155 in the ordinary case of an insolvent company. The Law provides for the appropriate procedure and this is the one which should normally be followed. However, as referred to earlier, the Court's jurisdiction to order a winding up under Article 155 is a wide one and we are persuaded that, in the particular circumstances of this case, it would be right to exercise that jurisdiction."

8.        In the context of this particular application, we also gain guidance from Salamanca Corporate Services [2016] JRC 108A.  In that case, when the case was considering alternatives to a just and equitable winding up it said, at paragraph 30 (ii):

"The company cannot be the subject of a summary winding up.  The quorum for a shareholder meeting cannot be achieved because only 1 of the 3 shareholders remain in existence and the company's Memorandum and Articles of Association requires at least 2 members for there to a quorum.  ..."

9.        The Court at paragraph 36 of its judgment said this:

"36. So turning to our decision on those issues and taking the first issue, it is clear from the case law that the Court has a wide jurisdiction to order a just and equitable winding up of the Company and we agree with the representors that this is an appropriate case in which to make such an order for the following reasons, namely:-

(i)        The only route open to the representors in respect of the dissolution of the Company is to seek to invoke the jurisdiction of the Royal Court to order a winding up of the Company on "just and equitable grounds", pursuant to Article 155 of the Law. The alternatives to dissolution on just and equitable grounds are not available in the current circumstances.

(ii)       Allowing the Company to be struck off the register pursuant to Article 205 of the Law would be inappropriate, for the reasons which we have just set out above.

(iii)      The Company was established for the purposes of property investment. The Property was sold in 2003. Two of the shareholders have been dissolved (Minories HPY and Minories New Basis) and their owners have no intention of re-instating those companies. The substratum of the Company has gone. It is currently a live, solvent, but dormant company serving no purpose (and will serve no purpose)..."

10.      The application appears to have met the provisions of Article 155 of the Law.  No declaration has been made or recalled under the Désastre Law, the Companies are not insolvent and there are no creditors.  A summary winding up is not available for the reasons that we have mentioned above.

11.      Accordingly, we think it an appropriate exercise of our jurisdiction to order that the three Representors be wound up on a just and equitable basis.  Whilst it would be usual to appoint a liquidator to conduct the winding-up, by reason of the complete inactivity of the Companies at any stage, their effective dormancy from creation, the absence of any creditors or otherwise, we agree and order that the dissolution may take effect in accordance with the draft Order of the Court prepared by the Representors, namely that the Company is dissolved on the registration of the Act of Court with the Registrar.

Authorities

Companies (Jersey) Law 1991

Leveraged Income Fund Limited [2022] JLR 209. 

Poundworld Limited [2009] JRC 042. 

Salamanca Corporate Services [2016] JRC 108A.