The Financial Conduct Authority (FCA) does not need the Insolvency Court's permission to take action against a company in liquidation ruled by the High Court in a case concerning multinational construction company, Carillion which collapsed in January 2018.
In the case, The Financial Conduct Authority v Carillion Plc, the High Court was asked to determine whether regulatory action against a company in liquidation constitutes an "action or proceedings" that requires the permission of the Insolvency Court under section 130(2) of the Insolvency Act 1986.
In August 2020, the FCA was contemplating issuing statutory notices against Carillion and some of its directors regarding alleged market abuse breaches. The Insolvency and Companies Court ruled that this required the court's permission which was ultimately granted.
In July 2021, the FCA appealed the Court's decision, arguing that "this was the first time anyone had suggested that permission was required" to take regulatory action against a company in liquidation and that the Official Receiver has been involved in at least two prior cases in which final notices were issues against companies in liquidation.
Mr Justice Michael Green, in his Judgment, found that the Insolvency and Companies Court adopted "too wide a construction of section 130(2)" and that the FCA should not have to "seek the permission of the insolvency court to exercise its statutory powers".
He added "Nor do I think that parliament could have intended that the comprehensive statutory regime of FSMA operated by the FCA acting in the public interest should be overlain with the requirement to seek the permission of the court to proceed if the company in question has gone into compulsory liquidation."
This ruling will assist the FCA in pursuing other actions against companies in liquidation.
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