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Ash
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For the attention of Alex W — RE Companies Act 2006, Part

Customer Question

For the attention of Alex W —

RE Companies Act 2006, Part 26 Reconstructions & Amalgamations, s.900
[900 Powers of court to facilitate reconstruction or amalgamation: 
http://www.legislation.gov.uk/ukpga/2006/46/section/900 ]


Context: 

• Limited company goes inactive and waits to be struck-off the register. 

• The director sets up as a Small Trader and transfers all business operations to the new venture from the Ltd. company; offering the same services, employing the same staff, from the same premises, with the same company name bar "Ltd".  

• The Ltd. company is dissolved, cc. 3 months later due to "non-compliance".  

• The former-director continues trading as a Sole Trader.

• A Claimant, in the middle of pursuing a claim against the Ltd. company for non-payment of wages for services rendered,  is told that the Defendant officially no longer exists.  The Claimant submits an N244 requesting "To make an order pertaining to s.900 of the Companies Act 2006 for the amalgamation of the dissolved company [name] and the currently trading business [name] and the subsequent transference of liabilities from the transferor company to the transferee company; thus making provision for the continuation of legal proceedings against the transferor company."

• The (District) Judge is informed by the Defendant's solicitor that the above is correct, i.e., that the former-director has continued trading as a Sole Trader and as the [name of Ltd. company bar "Ltd."]

• The Claimant's application is unsuccessful and there is no transference of liabilities or amalgamation.


Question:  Why was the Claimant unsuccessful?  

Was it anything to do with the 'level' of the Judge (i.e. District).  The Judge did mention something about 'Circuit Judge' but I didn't know if he meant someone at that level could have granted the order. If so, are there any grounds for appeal?  

- Many thanks.
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.

Alex Watts :

Hello my name is Alex and I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply, but rest assured I will be giving your question my immediate attention upon return You do not need to wait here as you will get an email when I reply.

Alex Watts :

Did the Judge give a reason for the application to be dismissed please?

JACUSTOMER-3qt0tkg2- :

Not that I understood.

On the N244, point 3 I wrote as follows:

“To make an application to the Court to request that individuals be included as Defendants. Namely, [Name 1] and [Name 2] – the former Directors [Company 1] (the 1st Defendant) and/or make an order pertaining to s.216-217 of the Insolvency Act 1986.

OR

To make an order pertaining to s.900 of the Companies Act 2006 for the amalgamation of the dissolved company [Company 1], and the currently trading business [Company 2] and the subsequent transference of liabilities from the transferor company to the transferee company; thus making provision for the continuation of legal proceedings against the transferor company (or to enforce TUPE regulations should they have been applied in this case). - At the discretion of the Court.”

Because of this the conversation was quite long, and I got rather lost in it all. The Judge and Defendant’s solicitor had quite a fast paced conversation and I was aware that rules were being picked apart: for example, that s.216-217 of the Insolvency Act could not be applied because the company in question was dissolved due to non-compliance – they became inactive and waited to be struck off the register rather than going into liquidation.

In terms of why s.900 of the Companies Act 2006 could not be applied, I really don’t understand. The (Deputy) Judge did say something about Circuit Judge’s so I wondered if it might be that I ought to have gone further up and he didn’t have the authority to make such an order, but to be honest by that part I was completely bewildered by the whole experience and didn’t really follow what was going on.

JACUSTOMER-3qt0tkg2- :

If this is the case however I wouldn’t know what to do of if I ought to appeal. For I just got stung for a large sum paying for the Defendant’s solicitor’s time for the hearing of the last order (despite checking on the form waned it to be decided without a hearing), and am terrified to risk another charge – I’m on a low income/on benefits and just can’t afford it. Would there be any way to get an appeal but protect myself from charges?

JACUSTOMER-3qt0tkg2- :

....Could it be because there was no meeting of any creditors beforehand? If this was done, could s.900 of the Companies Act 2006 then be applied?

Alex Watts : Did you ask for permission to appeal?
JACUSTOMER-3qt0tkg2- :

Not while I was in there - I didn’t understand why I wasn’t being successful, but was scared of doing the wrong thing. Because they sounded like they knew what they were doing (the Judge saying he read the details of some legislation while we’d had a break earlier – giving me the impression he wanted to rule in my favour but really couldn’t), it seemed likely I might just have not followed the conversation so didn’t know what to say or do.

Also I have a chronic health condition which means my cognitive skills can become impaired under stressful situations – and by this point my brain had gone so slow and fuzzy that I could barely speak or comprehend what was really going on.

Alex Watts : What reason did the judge give to refuse the application?
JACUSTOMER-3qt0tkg2- :

As I said above, he mentioned somthing about Circuit Judge’s, I think suggesting that a Circuit Judge might have the right to order an amalgamation of the two companies, but I wasn’t aware of a reason given why he couldn’t make such a ruling.

Alex Watts : Ok. You can only appeal if
Alex Watts : 1) There has been an error in law, ir
Alex Watts : 2) There has been an error in court procedure, or
Alex Watts : 3) The decision made was one which no reasonable judge ought to have made.
Alex Watts : You need to complete form N161 and seek permission to appeal on the papers.
Alex Watts : If this is refused you can ask for an oral hearing.
Alex Watts : If this is refused at an oral hearing you have to apply to the court of appeal.
Alex Watts : But you can seek to appeal but you must do this within 21 days.
Alex Watts : Can I clarify anything for you about this today please?
JACUSTOMER-3qt0tkg2- :

What if I’m not sure about your above points 1–3? Can I request the Court provide me with a written document which explains the ruling and why I was unsuccessful?

Alex Watts : Yes. You are entitled to a transcript with reasons.
Alex Watts : Can I clarify anything else?
JACUSTOMER-3qt0tkg2- :

When I submitted the N244 I checked ‘no hearing’ but then it was ruled a hearing would be necessary and I’ve gotten stung paying the fees for the other side’s solicitors (a personal problem considering my low income, but what feels like a tremendous injustice as the Defendant appears to have successfully evaded –their– debt!)

If I submit a N161 could the same thing happen? I couldn’t bear having more fees landed on top…

Alex Watts : If you appeal and you lose, yes you would be liable for costs.
Alex Watts : Does that clarify?
JACUSTOMER-3qt0tkg2- :

Yes... but it is a horrible system.

Alex Watts :

If this answers your question could I invite you leave feedback on my service which I hope has been excellent today, if you need more information or help then please click reply.

Please remember that I am always happy to help if you have future questions, even if I am in Court I can normally respond within a few hours. For future information, please start them with ‘For Alex W’.

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