Creditors will sometimes find themselves trying to recover a debt from a company that has been struck off the register. What can a creditor do in these circumstances?

If a company is removed from the register, the Court is still able to liquidate a company and appoint a liquidator as if the company continued in existence (s 327 Companies Act 1993). However, this does not mean that a creditor should not be concerned about a debtor company being struck off.

The effect of a striking off is that in a legal sense the company ceases to exist. Any property of the company vests in the Crown. A struck off company cannot legally enter contracts, eg. settlement agreements to pay debts, or be named as a party to litigation.

It is advisable, therefore, that if a creditor receives notice that a debtor company is to be removed from the register the creditor considers sending a written objection to the Registrar of Companies. The 2 main grounds of objection under s321 Companies Act 1993 are that:
(b) the company is still carrying on business or
(d) the creditor has an undischarged claim against the company.

If the creditor has evidence that the company is still trading under ground (b), eg. recent correspondence from company officers, invoices or accounts, the Registrar must not remove the company.

However if the creditor objects under ground (d) it will receive only 20 working days to provide evidence to the Registrar that liquidation proceedings have been filed or a formal application has been made to the Court to prevent the removal. If a debtor company has already been removed from the register, a creditor is entitled to apply in writing to the Registrar to restore the company. The grounds are that at the time of the striking off, the company was either still carrying on business, was a party to legal proceedings, or was in receivership or liquidation.

The Registrar will advertise the application and restore it to the register if no objection is received. If it is objected to, an application will need to be made to the High Court. Once a company is restored it is deemed to have continued in existence. Any property re-vests in the company.

This is a general summary only and should not be taken as a substitute for specific advice.

For further information contact Kevin Sullivan:
kevin.sullivan@phillipsfox.com

Web site: Phillips Fox