UK: the registration of charges by companies and LLPs - consultation on draft legislation

The Department for Business, Innovation and Skills is seeking final views on draft legislation to reform the current system for the registration of charges by companies and limited liability partnerships: see here. Updated explanatory notes, which also contain several questions for consultation, are available here (pdf). The draft of the Companies Act 2006 (Amendment of Part 25) Regulations 2012 is available here (pdf) and the draft of the Limited Liability Partnerships (Application of Companies Act 2006) (Amendment) Regulations 2012 is available here (pdf).

UK: Scotland: application for late registration of a charge declined

Lord Hodge, sitting in the Court of Session, Outer House, has declined an application for late registration of a charge under Section 420 of the Companies Act (1985): see Salvesen, Re Companies Act [2009] CSOH 161. The application had been made after the company had entered administration. In rejecting the application, Lord Hodge observed (para. [12]):

The onset of formal insolvency, as a general rule, fixes the position of creditors, who are ranked on the insolvent estate in accordance with their strict legal rights. From then on, the insolvency practitioner holds the company's assets for the benefit of the creditors in accordance with the rights which the general law gives them as to ranking. For the court thereafter to interfere with that ranking would be a serious step. I do not exclude the possibility in exceptional circumstances of the court allowing the late registration of a charge after formal insolvency had commenced, for example where a creditor had been the victim of fraud and especially if the perpetrator stood to gain in the insolvency through the invalidity of the charge. But in the absence of exceptional circumstances, I do not consider that it is just and equitable to interfere with the statutory ranking of creditors on insolvency".