Summary

The judgment is available at: [2010] EWHC 826 (Ch) 

The respondent company was a global supplier of networking solutions. In January 2009, it entered administration with the aim of rescuing its business as a going concern. One of the consequences of the administration was that redundancies had to be made and accordingly, in March, notice of termination was given to a number of employees at the company's premises in Northern Ireland. 37 of those employees (the second applicants) wished to make claims arising out of the termination of their employment. Paragraph 43(6) of Sch B1 to the Insolvency Act 1986 provided that no legal process could be instituted or continued against the company or property of the company except with the consent of the administrator or the permission of the court. The second applicants were unsuccessful in their application for the consent of the joint administrators to commence tribunal proceedings in Northern Ireland, but continued those proceedings nonetheless. They, together with the first applicant, the union, also issued the instant application before the English court to continue the Northern Ireland proceedings. The claims in respect of which permission was sought at the instant hearing were for unfair dismissal, breach of contract and discrimination.

The applicants submitted that permission should be granted because the claims had a real prospect of success and it would be inequitable not to allow them to proceed. They further contended that the claims did not fall within the relevant provisions of the Insolvency Rules (namely, rr 12.3(1) and 13.12; see [11] of the judgment) and therefore were not debts or liabilities for the purposes of the administration, but that, if pursued to judgment, the claims would be provable in any liquidation proceedings, which feature rendered their case sufficiently exceptional to warrant the grant of permission to proceed. Underpinning those submissions were the propositions that, inter alia: (i) because of the moratorium, the applicants currently had no claim at all; (ii) if the moratorium were lifted, there could be a claim but until there was a judgment on that claim there could be no provable debt; (iii) that was because the company was defending the claims and the actual existence of a provable debt would depend upon the exercise of judicial discretion; and (iii) although there could not be a claim in the administration, there could be a claim in a subsequent liquidation.

The application would be dismissed.

(1) The question was whether the applicants' claims were 'exceptional' in some respect, not whether they had a real prospect of success and it would be inequitable not to allow them to proceed (see [8] of the judgment).

AES Barry Ltd v TXU Europe Energy Trading (in administration) [2004] All ER (D) 160 (Sep) applied.

(2) Paragraph 43(6) of Sch B1 to the Act did not address the existence of claims: it addressed the manner of their enforcement. Creditors were not allowed to initiate any form of process immediately or ultimately involving the court or its procedures or to commence any quasi legal process or to take direct action to establish or recover under a claim. Although those rights were suspended, the claim did not disappear. The suspended rights were replaced by a right under r 2.72 of the Rules to submit a claim in writing to the administrator which would be dealt with in accordance with that section of the Rules (see [23] of the judgment).

The applicants in the instant case would still have 'claims' even if permission for their actions to continue to judgment were refused (and would have had 'claims' even if actions had not been commenced). Their position in relation to the moratorium on those claims was no different from that of any other trade creditor or unsecured lender. Further, on the basis on which the case had been conducted, the submission that if there was a claim it nonetheless required a judgment to render it provable could not be sustained, having regard to the nature of the claim and the allied point of the nature of the decision on which an award depended. Each of the claims in the instant case was either a debt or liability to which the company had been subject at the date of administration, or a debt or liability to which it became subject after the date of administration by reason of an obligation incurred before that date. In all the circumstances, the claims advanced by the applicants were not 'exceptional' so as to warrant the grant of permission for their continuation and the lifting of the moratorium otherwise applying in the administration (see [23]-[25], [27]-[35] of the judgment).