Freezing Orders and Dissolved Companies

Nicola Sharp of Rahman Ravelli outlines a recent judgement that allowed a dissolved company to seek an order.

The judgement in the case of Yuzu Hair and Beauty Ltd (Dissolved) v Selvathiraviam [2019] is the first time that the High Court in England has given permission for a company that has been dissolved to apply for a freezing order. 

The dissolved company applied for the continuation of a freezing order against its accountant. It had alleged that fraudulent activity by the accountant had led to the company being struck off the register at Companies House. 

In considering how to respond to the application from a limited company that has been closed down, the court devised an elaborate approach to ensure a fair outcome. A director and shareholder of the company had begun an application to restore the company under s1029 of the Companies Act 2006. There was also the application by the dissolved company to continue the freezing injunction that had previously been ordered. 

Taking both these factors into account, the High Court used s37 of the Senior Courts Act 1981 to order the injunction within the application to restore the company. The freezing injunction was approved – and the director and shareholder were added as applicants so there were no problems regarding the injunction being in place at a time when the company (for the time being, at least) no longer existed. 

The approach taken shows the scope for pragmatism by the courts when an issue is time-sensitive. Perhaps most importantly, however, this is a case that shows that a company being dissolved does not necessarily prevent an application for a freezing injunction.