Re Vanguard Number 1 Limited [2025] EWHC 1786 (Ch)
Declaration of general application – Stay – s.130(2) – sale by secured creditor
Does the stay in s.130(2) of the Insolvency Act 1986 apply to the sale of property by a secured creditor pursuant to its power of sale? Opinions seemed to differ, but the court has provided a definitive answer.
Philip Currie was instructed by a secured creditor of the company, which was looking to sell a freehold property belonging to the company and which was caught by its charge. The proposed purchaser was concerned about the effect of s.130(2) and required the charge holder to apply to court to obtain permission for the proposed sale to go ahead.
Section 130(2) of the Act provides that “When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose.”
This gave rise to the prior question of whether this section applied at all: is a sale by a secured creditor pursuant to its power of sale caught by the stay in s.130(2)?
Agreeing with the reasoning put forward on behalf of the secured creditor, Deputy ICC Judge Baister accepted that such a sale is not caught by s.130(2) because the sale is not an “action or proceeding”: it is not an “action” because it is out of court; and it is not a “proceeding” (cf. execution and distress) because the sale would not interfere with the statutory purposes of s.130(2), namely (i) ensuring pari passu distribution of the company’s assets, and (ii) ensuring that claims are adjudicated upon within in the liquidation (see Financial Conduct Authority v Carillion plc [2021] EWHC 2871 (Ch) at ¶79 and Mortgage Debenture Ltd v Chapman [2016] 1 WLR 3048 at ¶12).
The Judge made a declaration of general application: the stay in s.130(2) “does not apply to a sale of property by a secured creditor pursuant to a power of sale contained in a fixed legal charge/mortgage”.
