Background
Greenbank Technology Limited was a wholly owned subsidiary within a group of companies controlled by ASP CPM Holdings, LLC. As part of a broader corporate rationalisation, the group systematically wound down the company: its assets and business were transferred to the parent, its liabilities discharged, its capital reduced, and intercompany balances set off until the company was left with a single £1 asset and no liabilities. The final step was to place the company into a Members’ Voluntary Liquidation (MVL) — a solvent liquidation — with two PricewaterhouseCoopers partners appointed as joint liquidators. A solvent MVL was essential: the ICAEW Code of Ethics prohibits insolvency practitioners from taking a Creditors’ Voluntary Liquidation (CVL) appointment where they have provided audit-related services within the preceding three years, but that restriction does not apply to MVLs.
To enter an MVL, section 89 of the Insolvency Act 1986 requires the directors to make a statutory declaration of solvency — a declaration that the company can pay its debts in full within twelve months — before a person authorised to administer oaths under section 18 of the Statutory Declarations Act 1835 (a justice of the peace, notary public, or equivalent). One director, Mr Callison, complied by declaring before a notary. The other director, Mr Williams, made his declaration via video conference before a person who described herself as a “support worker” — someone with no authority to administer oaths. Companies House refused to register the declaration. Under section 90 of the Insolvency Act 1986, where no valid section 89 declaration has been made, the liquidation is automatically a CVL, not an MVL.
The joint liquidators, the company, and the sole parent shareholder applied to the High Court seeking one of three forms of relief: (1) waiver of the defect under Insolvency Rule 12.64 so that the liquidation could proceed as an MVL; (2) rescission of the CVL; or (3) an indefinite stay of the CVL proceedings.
The Court’s Holding
ICC Judge Agnello KC refused the primary relief. The court held that the failure to make the statutory declaration before a suitably qualified person is a fundamental defect, not a mere formal or procedural irregularity capable of waiver under Insolvency Rule 12.64. Parliament expressly required a declaration before a qualified officer, and that requirement forms an integral part of the section 89 regime, which also creates criminal liability for directors who make the declaration without reasonable grounds. Because the requirement is fundamental, non-compliance does not produce a defective declaration — it produces no declaration at all. Rule 12.64 can cure formal defects in otherwise valid insolvency proceedings; it cannot retroactively create a statutory declaration that was never validly made.
The court drew a critical distinction between two categories of non-compliance. Where a director makes a declaration via video link rather than in person — but still before a suitably qualified person — the defect is waivable, as confirmed by the Temporary Insolvency Practice Direction (No 5) and the obiter remarks in Galer v Mond [2021] EWHC 1952 (Ch). In that scenario, a genuine declaration is made, just by remote means. By contrast, where the declaration is made before someone with no authority to administer oaths, there is simply a witnessed signature — not a statutory declaration at all. The earlier authorities on inaccuracies in the statement of assets and liabilities (De Courcy v Clements [1971] Ch 693; Re New Millennium Experience Co Ltd [2004] 1 BCLC 19) were distinguished: those cases turned on the proper construction of the phrase “statement of assets and liabilities,” not on the waiver of a condition that goes to the existence of the declaration itself.
The court also declined to be persuaded by the analogy to administration appointments under Schedule B1, where similar statutory declaration requirements have been treated more flexibly, noting that section 89’s criminal sanction regime makes it materially different in character and legislative intent.
Key Takeaways
- A director’s statutory declaration of solvency under section 89 of the Insolvency Act 1986 must be made before a person authorised to administer oaths (a justice of the peace, notary public, or equivalent). If it is not, there is no valid declaration, the liquidation is automatically a CVL under section 90, and that defect cannot be waived under Insolvency Rule 12.64.
- There is a decisive difference between a declaration made remotely before a qualified person (a waivable defect) and a declaration made before an unqualified person (a fundamental nullity). Practitioners should ensure that each signing director — including those signing remotely or abroad — declares before a properly authorised officer, not merely a convenient witness.
- The authorities permitting courts to look past minor inaccuracies in the accompanying statement of assets and liabilities (De Courcy; New Millennium) concern statutory construction of what “statement of assets and liabilities” means, not discretionary waiver; they offer no foothold for curing a defect in the declaration itself.
- Insolvency practitioners appointed as liquidators of a company to which they have provided recent audit-related services must take particular care to verify that all section 89 formalities are correctly observed, since an unintended CVL may disqualify them from acting altogether.
Why It Matters
This judgment provides the clearest modern analysis of the boundary between waivable and non-waivable defects in the MVL declaration regime, filling a gap that the Temporary Insolvency Practice Direction left open. Courts had already confirmed that video-link declarations before qualified officers are curable under Rule 12.64; Greenbank Technology now establishes that declarations before unqualified persons are not. The ruling has practical consequences for any solvent group restructuring — a common feature of private equity and corporate M&A — where directors may be dispersed across jurisdictions and time zones, and where remote execution of legal formalities has become routine. The fact that the error converted an intended MVL into a CVL of an entirely solvent, shell company illustrates how a procedural misstep can have significant regulatory, professional, and structural consequences that no amount of commercial good faith can undo after the event.
The case also underscores the importance of the section 89 criminal liability framework as a reason why its formalities attract stricter judicial treatment than comparable requirements in the administration context. Advisers orchestrating solvent liquidations should treat the identity and qualifications of the oath administrator — for every director, wherever located — as a substantive compliance step rather than a ministerial one.