High Court rules on whether CVL in the UK is available for foreign-incorporated companies

Relevant law

Paragraph 22 of Schedule B1 to the Insolvency Act 1986 (the “Insolvency Act”) provides that a company, or the directors of a company, may appoint an administrator. An administration is a legal process governed by the Insolvency Act, with the aim of:

“(a) rescuing the company as a going concern, or

(b) achieving a better result for the company's creditors as a whole than would be likely if the company were wound up (without first being in administration), or

(c) realising property in order to make a distribution to one or more secured or preferential creditors.”¹

Paragraph 111 of Schedule B1 defines a ‘company' to include one not incorporated in an EEA State, but that has its COMI in a member State (other than Denmark) or in the United Kingdom.

Paragraph 83 of Schedule B1 provides the statutory mechanism for administrators to convert a company from administration into a CVL. Simply put, CVL is a legal process governed by the Insolvency Act with the aim of winding up the company voluntarily, rather than by way of a court mandated process.

The application

Esken Limited (“Esken”) was a company incorporated in Guernsey. It entered administration in England on 21 March 2024 pursuant to paragraph 22 of Schedule B1 of the Insolvency Act. After realising the majority of the company's assets, Esken's administrators chose to conclude the administration by moving the company into CVL.

On 17 March 2025, the Joint Administrators filed a notice with the Registrar to move the company into CVL. The notice was registered on 21 March 2025. By application, the Joint Liquidators sought an order pursuant to Rule 21.4 of the Insolvency (England and Wales) Rules 2016: “confirming the creditors' voluntary winding up of Esken entered into on 21 March 2025”.

Typically, moving from an administration to a CVL is relatively straightforward. However, the difficulty for the Court arose from the wording of the Insolvency Act in relation to the winding up of a company whose registered office is outside the United Kingdom. Section 221(4) of the Insolvency Act provides that “no unregistered company shall be wound up under this Act voluntarily, except in accordance with the EU Regulation”.

In order to properly consider the impact of section 221(4) of the Insolvency Act on unregistered companies, it is necessary to consider the meaning of “in accordance with the EU Regulation”. Section 221(5) of the Insolvency Act sets out the circumstances in which an unregistered company may be wound up:

“(a) if the company is dissolved or has ceased to carry on business, or is carrying on business only for the purpose of winding up its affairs;

(b) if the company is unable to pay its debts;

(c) if the court is of the opinion that it is just and equitable that the company should be wound up.”

Taking this provision at face value, it appears to be limited to winding up of unregistered companies by the court, rather than a voluntary liquidation. The Court noted that there was no provision for the winding up of an unregistered company as a means of exiting an administration.[2] Therefore, it posed the question: are companies whose registered office is outside of the UK prohibited from moving from administration to CVL under the Act? In answering this question, the Court noted that this position is at odds with paragraph 83 of Schedule B1, which, as the court put it, allows a company to move “almost seamlessly, from administration to creditors' voluntary liquidation”.³

Esken was incorporated in Guernsey. Based on evidence from the Joint Liquidators, the Court accepted that Esken's main operations were in England, it conducted the administration of its interests on a regular basis in England and that this was known to its key creditors and ascertainable by third parties. This was sufficient to demonstrate Esken's ‘COMI' was in England.

In reconciling the potentially prohibitive provisions of section 221(4) of the Insolvency Act, the Court noted that, in its view, the provisions of Part V did not overlap, interact with or duplicate Schedule B1. Therefore, the Court held that:

1) the definition of ‘company' from paragraph 111(1A)(c) of Schedule B1 applied to paragraph 83 of Schedule B1; and

2) paragraph 83 expressly permits a company such as Esken to enter CVL by the route there prescribed.

Why does this matter?

This decision provides welcome clarity for a question that had caused uncertainty in restructuring practice. For overseas companies that can establish COMI in England, the ruling confirms that moving from administration to CVL remains an available exit route and therefore opens a process that is typically faster, cheaper, and more straightforward than court-supervised winding up. Companies ought to understand how they are categorised under the Insolvency Act in order to determine what insolvency processes are available to them.

Authored by Sarah Sharp and Peter FitzGerald.