Registration Of Charges Against A Company
Charges void against a Liquidator can arise which can affect the statutory order of payment in insolvency proceedings.
A charge such as a fixed or floating charge is created to provide a creditor with security for credit that it may advance to a company.
When a company creates a charge such as a Legal Charge or a Debenture it must be delivered to Companies House within 21 days of its creation. This is a provision set out in Section 859A of the Companies Act 2006.
Companies House is required to register the charge provided a certified copy of the charge document is delivered up to it along with Form MR01 statement of particulars of a charge.
This does not apply to a charge given to a landlord on provision of a cash deposit given as security for a lease.
Consequences Of A Failure To Register A Charge
If a charge is created by not delivered to Companies House within 21 days of creation or such period as a Court may permit then in accordance with Section 859H(3) of the Companies Act 2006 it is void against a company’s:
- Liquidator
- Administrator
- Creditor
Equitable Charges Void Against A Liquidator
An equitable charge is one where the legal formalities were not addressed or could not be addressed.
There is in essence no difference to the matter of an equitable charge being void if not registered correctly as with any other type of charge.
This issue was demonstrated in the case of Bushby & Anor v Actua Investment Llc (Re Rodus Developments Ltd) [2022] EWHC 3232 (Ch):
27. Ultimately, however, even assuming that an equitable charge arose in Actua’s favour on 16 July 2018, this does not assist Actua, because any such equitable charge is now void by virtue of Part 25 of the Companies Act 2006. As rightly noted by Mr Morgan KC,
(1) any such charge was ‘created’ by the Company pursuant to the Actua Facility Agreement and was therefore required to be registered within ‘the period allowed for delivery’: s859A(1) and (2) CA 2006;
(2) that period was 21 days beginning with the day ‘after the creation of the charge’ unless an order allowing an extended period was made (and no such order has been made in this case): s859A(4);
(3) the charge instrument was not a deed and it either had effect on execution (alleged to be 3 April 2018) or on the date that the Properties were acquired by the Company (16 July 2018): s859E(1);
(4) the charge was not registered within 21 days of either of these dates or at all and it was therefore void as any form of security against the Joint Administrators and the creditors of the Company: s859H;
(5) in these circumstances, Actua has no valid interest to protect, it has made the UN1 Application without reasonable cause and it is thereby prejudicing the interests of the Joint Administrators and the creditors of the Company.
