Lloyd's Maritime and Commercial Law Quarterly
WINDING UP FOREIGN COMPANIES: THE INSOLVENCY ACT 1986, PART V
The Bolivia
Questions concerning the winding up of foreign corporations under Part V of the Insolvency Act 1986 (“the 1986 Act”) have arisen quite frequently in recent years.1 Those cases, which largely deal with when the English court has jurisdiction to make a winding up order, have generated some comment, including by Mary Arden, Q.C., in this Quarterly.2 It is interesting to note therefore that the effect of a winding up order under Part V recently arose before Arden, J. (as she has become). In Re Lineas Navieras Bolivianas S.A.M. (The Bolivia),3 Arden, J., considered that, once a winding up order was made, the whole of Part IV (winding up by the court), became applicable: with the consequence that an execution or attachment against a foreign company might come within s. 128(1) of the 1986 Act, even though s. 128(1) is expressed to apply where “a company registered in England and Wales is being wound up by the court”.4
Part V of the 1986 Act governs the winding up of unregistered companies.5 Section 220 defines an unregistered company as including “any association and any company” (except companies registered under past or present Companies Acts). Section 221(1) explains that, subject to certain modifications, “all the provisions of this Act and the Companies Act about winding up apply to an unregistered company”.6 It was settled a century ago that a foreign company may be wound up as an unregistered company;7 and, once the court has made an order, a foreign company is a “company” for winding up purposes.8 But s. 128 uses the particular expression a “company registered in England and Wales”.9
The facts before Arden, J., concerned a foreign corporation (“Linabol”) which owned the ship Bolivia. On 14 February 1994 a creditor (“Doraship”) presented a petition to have Linabol wound up. Previously the Bolivia had been arrested by a different creditor (“Tramp Oil”), and other creditors had also issued writs in rem. After 14 February 1994 but prior to the winding up order (made on 13 April 1994) the applicants issued writs in rem. On 18 March 1994 Tramp Oil obtained judgment in default and an order was made in the Admiralty Court for the sale of the Bolivia. Upon the applicants seeking leave to continue their actions in rem, counsel for the liquidators argued, inter alia that the applicants had put into force after the commencement of the winding up an “attachment sequestration, distress or execution” contrary to s. 128(1). Arden, J., noted that Linabol was being wound up under Part V of the 1986 Act and observed:10
1. See Re A Company (No. 00359 of 1987) [1988] Ch. 210; Re Real Estate Development Co. [ 1991 ] B.C.L.C. 210; Re A Company (No. 003102 of 1991), ex p. Nyckeln Finance Co. Ltd [1991] B.C.L.C. 539; and Re Wallace Smith and Co. Ltd [1992] B.C.L.C. 970.
2. “Winding Up A Foreign Company” [1989] LMCLQ 20. And see generally Dicey & Morris, The Conflict of Laws, 12th edn (1993), 1121–1123.
3. [1995] B.C.C. 666, 669F.
4. Emphasis added.
5. The winding up of unregistered companies derives from the Companies Act 1862.
6. See also s.229(1), passim.
7. Re Matheson Bros Ltd (1884) 27 Ch. D. 225.
8. See also s. 229(2).
9. The words appear in only four places in Part IV (ss 117, 128, 185(4) and 190(2)).
10. At p. 669F.
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