I expect that we all have a story to tell about a peculiar rejection or two from Companies House, including where the reasons for the rejection don’t appear to derive from the Rules.  Just the other day, R3 told us that Co House is rejecting Declarations of Solvency that don’t have the company name on page 2.  Weird.

Here are a couple of progress report filing rejections that have had me scratching my head.

Scenario 1: When the Office Holder Changes

Imagine a firm where an IP takes appointments as a sole office holder.  The IP decides to leave the firm, so a block transfer order is sought to transfer all their cases to another IP in the firm.  The cases continue to be administered by the same case teams, using the same cashbooks and time recording system.  All that has happened is that the office holder has changed.  What do you think the next progress report on these cases should look like?

Companies House’s view is that, while the progress report timeline does not change, the incoming office holder can only issue a report for their period in office.

For example, take a CVL with a liquidation date of 02/04/2023:

• Departing liquidator filed a report ending 01/04/2024
• Block transfer order dated 02/02/2025
• Companies House expects the new liquidator to submit a report covering the period from 02/02/2025 to 01/04/2025
• This would lead to a gap in the reporting from 02/04/2024 to 01/02/2025
• The new liquidator’s R&P would also show the opening position as at 02/02/2025, 10 months after the old liquidator’s R&P’s closing position.  The chances are high that the two would not correspond.

Does this seem sensible?  Shouldn’t the record at Companies House be an uninterrupted sequence of reports showing the progress of the liquidation?

Doesn’t the liquidator’s report under R18.7(4) plug the gap?

True, R18.7(4) does require an incoming CVL liquidator to deliver as soon as reasonably practicable a notice to members and creditors “of any matters about which the succeeding liquidator thinks the members or creditors should be informed”.  Similar provisions apply to the other usual case types.

However, this will not plug the reporting gap:

• The rule refers to a “notice”, which suggests to me that it is intended to fall far short of a progress report.  For example, there is no indication that it would include an R&P.
• There is no requirement or facility to file this notice at Companies House.

What do the Rules say about the incoming liquidator’s reporting duty?

Not much.

R18.7(2) sets the scene:

• “The liquidator’s progress reports… must cover the periods of (a) 12 months starting on the date the liquidator is appointed; and (b) each subsequent period of 12 months”.

However, R18.7(3) states that “the periods for which progress reports are required under paragraph (2) are unaffected by any change in liquidator”.  In other words, the incoming liquidator does not re-read R18.7(2) as applying to them. 

But it seems to me that R18.7(2) must continue to apply in relation to the first liquidator.  For example, imagine that the CVL began on 02/04/2024.  This was the date of the first liquidator’s appointment, so R18.7(2)(a) applies to determine the date that the first progress report is due: 01/04/2025.

As R18.7(2)(a) must be read in this scenario as applying to the first liquidator, it cannot be used to support the view that this means that the second liquidator’s progress report cannot cover the period before the second liquidator’s appointment.

S192 and Rs18 describe that progress reports should detail how the liquidation has proceeded during the review period.  I do not read anything in them that prohibits a liquidator from detailing what occurred prior to their appointment where this forms part of the 12-month reporting period.

But what about hostile transfers?

If the succeeding liquidator took the appointment in hostile circumstances, e.g. where the previous liquidator had misapplied (aka stole) the company’s funds and did not hand over sufficient information for the successor to see clearly what had occurred, it might be difficult for the successor to issue an accurate progress report for the whole 12-month period.  The new liquidator might prefer to report solely on what the estate looked like when they took on the appointment.

I am not sure that that would be in the spirit of the Act/Rules, but of course they were not written to accommodate the scenario of a bent liquidator; they were written to make liquidations work in the hands of compliant professionals.

So what do we do?

I suggest that, fundamentally, the Act/Rules envisage the full term of an insolvency process to be documented at Companies House by means of sequential annual (or, in ADMs, 6-monthly) reports.  But, as I write this, Companies House remains of the view that a successor liquidator’s progress report cannot cover any of the period before their appointment.

I have sent to Companies House the reasons for my contrary view and I am waiting for their response.

Scenario 2: hoisted by my own petard!

Not long after I sent my email to Companies House, another client complained to me that Companies House had rejected their progress report because they required it to cover a full 12-month period, but this included several months, not only where they were not in office, but also where the company didn’t even exist.

Ah, yes, well, when I said that a liquidator should be able to file a report for a period prior to appointment, I wasn’t thinking about this scenario…

The Flipside: When a Company is Restored

Imagine this CVL:

• CVL commenced on 05/03/2020
• Liquidator filed progress report to 04/03/2021
• Liquidator sent final account to Companies House on 01/12/2021
• Company was dissolved on 01/03/2022
• Later, a new asset was discovered, so an application was made to have the company restored and the liquidator re-appointed.  This was granted on 10/10/2024
• Liquidator submitted a progress report for filing for the period from 10/10/2024 to 04/03/2025
• Companies House rejected the report, as they require a progress report for each 12-month period from 05/03/2020

Hmm…

It seems that Companies House requires the following progress reports:

• From 05/03/2021 to 04/03/2022 – most of this period is already covered by the filed final account and in 12/2021 the liquidator vacated office and was released
• From 05/03/2022 to 04/03/2023 and from 05/03/2023 to 04/03/2024 – the company was dissolved for the whole of this period
• From 05/03/2024 to 04/03/2025 – the company was only restored on 10/10/2024

What do the Rules say about the re-appointed liquidator’s reporting duty?

Well, I did say that the Rules seem to suggest that an uninterrupted sequence of progress reports should be filed, didn’t I?  So this does indicate that progress reports should be filed for the full period of a restored company’s non-existence, even though this seems nonsensical.

But is this the only interpretation..?

R18.7(5) states:

• “A progress report is not required for any period which ends after… the date to which a final account is made up under section 106 and is delivered by the liquidator to members and creditors”

So if a CVL has come to an end in the usual way and a final account has been delivered and filed, it could be argued that R18.7(5) means that no progress reports are required on its restoration.  Restoration simply returns the company to the register as if the dissolution did not happen.  It does not eliminate the pre-dissolution delivery and filing of the final account.

So what do we do?

I appreciate, however, that this argument is not helpful.  A re-appointed liquidator ought to be able to file progress reports for their second term in office and, if Companies House will only accept them where there is no gap in the reporting sequence, then so be it.

An alternative would be to ask the court, not only to restore the company and re-appoint the liquidator, but also to dispense with the statutory requirement to file progress reports for the period up to restoration.  I recommend that anyone looking to have such a company restored should discuss this with the instructed solicitors.

Capricious Companies House

I remember that, when we were all first grappling with the 2016 Rules, I’d had a few exchanges with Companies House staff where our interpretations differed.  Then we seemed to enter a honeymoon period during which Companies House staff generally took IPs’ filings at face value, not questioning the detail.  Of course, that approach had its own downsides leading to the filing of some flawed or illegible documents.

We now seem to have entered a new period where Companies House staff are scrutinising filings and rejecting documents for a variety of reasons.  Most of these rejections are entirely justified and work well to ensure that companies’ registers are maintained to high standards.  However, the reasons for some rejections appear questionable, contradictory, or to result in perverse outcomes.

The value of collaboration

What is worse, there is no easy way to communicate Companies House’s requirements to us all.  We only learn by our individual experiences, which I suspect is just as frustrating to Companies House staff tasked with “educating” IPs individually.  It is rare for an issue, such as the DoS issue I started this article with, to hit the headlines.

I wonder if there could be some kind of centralised communication with the Companies House insolvency team.  This might help us to learn lessons from others’ mistakes, as well as perhaps establishing logical and practical approaches to filings where the Rules alone do not provide the answer.