Rule 7.55 of the Insolvency Rules 1986 had no application in circumstances where a meeting of the board of directors of the company purporting to place the company into administration out of court pursuant to paragraph 22(2) of Schedule B1 to the Insolvency Act 1986 was inquorate and accordingly the resolution to appoint an administrator was invalid.

Sir Terence Etherton C so held on an application by the applicant, Esther Chan Piu-Kwan, to determine whether the second respondent, Melodious Corpn, a company incorporated in the British Virgin Islands and which was registered at Companies House as having a branch in England, was or had ever been in administration or liquidation in England. The records showed that the company went into administration on 1 November 2007 with the fourth respondent, Simon Paterson, as its administrator, and then went into creditors’ voluntary liquidation on 23 October 2008 with Mr Paterson as its liquidator. The applicant claimed that the company had never been placed in administration or liquidation because the fourth respondent was never validly appointed its administrator or liquidator.

Rule 7.55 provides: “No insolvency proceedings shall be invalidated by any formal defect or by any irregularity, unless the court before which objection is made considers that substantial injustice has been caused by the defect or irregularity, and that the injustice cannot be remedied by any order of the court”.

SIR TERENCE ETHERTON C said that it was common ground that the intention was to appoint the fourth respondent as administrator of the company pursuant to paragraph 22(2) of Schedule B1, namely by resolution of the company’s directors. The meeting of the company was inquorate and so, on the face of it, the resolution to appoint an administrator pursuant to paragraph 22(2) was invalid. The fourth respondent submitted that the resolution was saved by the provisions of rule 7.55 of the 1986 Rules. His Lordship rejected that submission. Rule 7.55 applied to insolvency proceedings. There were no proceedings unless there was a resolution of the directors pursuant to paragraph 22(2): see the analysis of Henderson J and the cases cited by him in In re Frontsouth (Witham) Ltd [2011] EWHC 1668 (Ch); [2012] BCLC 818; and also In re Euromaster Ltd [2012] EWHC 2356 (Ch); [2013] Bus LR 446, approving the statement of Judge Purle QC in In re Assured Logistics Solutions Ltd [2011] EWHC 3029 (Ch); [2012] BCC 541. There was no reason to disagree with Norris J’s approach in the Euromaster case. By parity of reasoning, rule 7.55 of the 1986 Rules had no application in the present case since there never was a decision of the directors of the company to appoint an administrator pursuant to paragraph 22(2) of Schedule B1 which complied with the company’s rules of internal management. The company was never placed in administration.