The Company, Paperback Collection & Recycling Limited, entered into creditors’ voluntary liquidation in June 2018. Thereafter, the joint-liquidators applied for an order that the Company’s assets could be distributed to the floating charge holders.
However, shortly before the Company entered liquidation, the Respondent, a public body concerned with environmental protection, served a statutory notice requiring the Company to remove waste deposited at one of its sites illegally. The liquidators then served notice pursuant to section 178 of the Insolvency Act 1986 disclaiming the leases and the waste both at the site in question and another, the Company was effectively discharged of liability from that point onwards.
Nonetheless the Respondent brought criminal proceedings against the Company and its directors and was ultimately successful in obtaining the imposition of a fine against the defendants. The issue then was whether a fine imposed on the Company by a criminal court was a debt provable in the Company’s winding up.
It was found that a fine imposed by way of sentence, even after the onset of insolvent liquidation, was a debt provable in that liquidation where it relates to an offence committed prior to the entry of liquidation. In those circumstances the fine is a contingent, or future, debt or liability.
Incidentally, the liquidators application for distribution of assets was granted as the fine was considered an unsecured debt and therefore it would not impact the position of the Company or secured creditors in the winding up.
In The Matter Of Paperback Collection & Recycling Ltd (In Liquidation) Sub Nom (1) Christopher Rattan (2) Lindsey Cooper V Natural Resources Body For Wales (2020)