The recent decision from the High Court of Justice in England and Wales in Bridgehouse (Bradford No. 2) v BAE Systems plc provides some useful clarification on the effect of a company being restored to the Register of Companies ("the Register").


In December 2012, Bridgehouse (Bradford No. 2) ("BB2") and BAE Systems plc ("BAE") entered into an agreement whereby BAE agreed to procure the sale (by one of its subsidiaries) of two properties to BB2 for the sum of £93 million ("the Agreement"). The sale was to complete on a date to be determined between 21 January 2020 and 1 July 2022.

BB2 was incorporated specifically for the purpose of entering into an agreement with BAE. BB2 did not carry on any other business and did not own any assets other than its rights under the Agreement. The Agreement formed part of a wider transaction called "Project Bradford" which involved the disposal by BAE of a portfolio of properties which were surplus to BAE's requirements. The disposal of these properties was expected to achieve a sum of over £200 million.

Clause 20.1 of the Agreement provided that, were BB2 to suffer an "Event of Default" BAE may terminate the Agreement by giving notice in writing. An "Event of Default" was defined in Clause 20.2 of the Agreement and included, at Clause 20.2(g), "being struck off the Register of Companies or being dissolved or ceasing for any reason to retain its corporate existence." Clause 23 of the Agreement stated that any notice which was served pursuant to Clause 20.1 would lead to the immediate termination of the Agreement.

In 2014, BB2 failed to comply with its statutory obligations under the Companies Act 2006 to file accounts. As a result, BB2 was struck off the Register on 31 May 2016. BAE served a notice of termination pursuant to Clause 20 of the Agreement on 2 June 2016.

BB2 made an application for administrative restoration and was restored to the Register on 28 July 2016. BB2 then challenged the validity of BAE's termination of the Agreement and arbitration proceedings were raised in March 2017.


The two pertinent issues determined by the arbitrator were:-

1. Whether an Event of Default under Clause 20.2(g) arose immediately upon BB2 being struck off the Register on 31 May 2016 (as BAE contended) or only after a reasonable period of time had expired without an application for restoration to the Register having been made (as BB2 contended); and

2. Whether any effective termination had to be reassessed retrospectively as a result of BB2's restoration to the Register by virtue of Section 1028(1) of the Companies Act 2006 such that the Notice of Termination was to be regarded as ineffective.

The arbitrator held that an Event of Default had arisen immediately upon BB2 being struck of the Register and therefore the Agreement had been validly terminated by the service of the notice by BAE. The arbitrator found that the termination was not affected by BB2's subsequent restoration to the Register and concluded that Section 1028(1) of the Companies Act 2006 did not automatically undo termination of the Agreement.


BB2 appealed the arbitrator's decision to the High Court. The Court was asked to consider:

i) whether the arbitrator was correct to conclude that an Event of Default arose immediately on 31 May 2016; and

ii) whether the arbitrator was correct to conclude that no reassessment of the termination was required following BB2's restoration and, more specifically, whether the arbitrator was right to conclude that Section 1028(1) of the Companies Act 2006 cannot undo the termination of a contract in these circumstances.

The Court held that the termination clause was clearly worded and that there was nothing within the clause to justify BB2's suggestion as to a reasonable period being allowed for the company to apply for restoration to the Register after being struck off.

The second issue was more complex. The Court considered a significant volume of case law and determined that to allow BB2's approach would deprive clauses, such as the one in issue here, of the certainty which they would otherwise offer. This was of particular note given that companies can apply for administrative restoration for a period of six years after being removed from the Register.

The Court stated that the arguments put forward by BB2 would lead to "highly unattractive" results. The Court held that the arbitrator was correct in his conclusion that the termination by BAE did not fall to be reassessed retrospectively.

Accordingly, BB2's appeal failed and the decision of the arbitrator was upheld by the Court.


Companies should be aware that, while the effect of restoration is that the company is deemed to have continued in existence as if it had not been dissolved or struck off, this might not be applicable to the company's contractual and business relationships, in particular termination of contracts as a result of service of a contractual notice reliant upon the company being struck off the Register.