• Haw & Anor v QM Systems Ltd [2024] EWHC 1944 (Ch)

    This case concerned the validity of appointments of joint administrators, appointed in respect of QM Systems Ltd, where there were procedural defects in the notice of appointment (NOA). It does appear to be the case that practitioners are still concerned over whether every “i” is dotted and “t” is crossed in an NOA. This may simply be a hangover from the days of prescribed forms where such errors were problematic. If it is the case that, as a result, we are now conditioned to be hyper-cautious, this may explain why we continue to see practitioners seek confirmation from the court that their appointment is valid. They do not wish to take any risk that it is not, and indeed, there have been a number of cases where the appointment has been challenged based on procedural hiccups. Play The current case is the most recent example of a practitioner doing this. In this case,  the court considered: (a) the requirement in the Rules to file three copies of the NOA with the court (in this case only one had been filed); (b) an error in the heading of the notice (in this case it referred to the appointment being made by the company not the directors); and (c) the failure to file consent from the qualifying floating charge holder (QFCH) (who had consented but evidence hadn’t been filed with the NOA). The judge determined that in respect of (a) and (b) that these were defects that were capable of remedy under r12.64 – as they were purely procedural in nature. It is not completely clear whether (c) was remedied under r12.64 although it appears that it might have been. That is because the judge concluded there was no conceivable prejudice – the QFCH having consented – and that there would be no injustice if the defect was 'cured'.

  •

    Boughey & Anor v Toogood International Transport and Agricultural Services Ltd (Re Insolvency Act 1986) [2024] EWHC 1425 (Ch)

    Here, the Court considered whose consent was required to extend an administration under paragraph 76 of Schedule B1 to the Insolvency Act 1986; that is, was it current secured creditors only, or was it also secured creditors who had been paid off in full? Play Although the administrators had sought and obtained consent to the extension from the only relevant secured creditor, the issue arose as to whether the administrators should also have sought consent from other parties who had been secured creditors at the time of appointment of the administrators, but had subsequently been paid off.  The Insolvency Service argued that if a creditor was classified as a 'secured creditor' at "the point of entry to the procedure", this classification would remain even if the creditor was then paid in full.  However, the court rejected this contention and held that any creditor whose debt had been paid off was in fact no longer a creditor, citing the definition of "secured creditor" in section 248 Insolvency Act 1986 as a creditor who holds (present tense) security.

  •

    Loveridge v Povey and Ors [2024] EWHC 329 (Ch)

    Here a company shareholder attempted to challenge the administrators' proposal to rescue a balance sheet solvent company by securing additional funding, instead of selling the business. The shareholder wanted to sell the business and assets. Play The application of Michael Loveridge to challenge the administrators' decision formed part of a long-running family dispute. The company in administration was Breton Park Residential Homes Ltd (Breton), and had been run by Michael's mother and brother Audey. A creditor or member of a company in administration may apply to court to claim that the administrators propose to act in a way which would unfairly harm the interests of the applicant, and this is what Michael did. Audey Loveridge transferred his sole shareholding in Breton to Michael and his mother just before his divorce from Melinda. In the course of the ongoing divorce proceedings, which had begun before Michael's application, Melinda challenged the transfer of company shares as a transaction undertaken with the intention of preventing her claim for financial relief. Ownership of the shares in the company was therefore disputed; and the administrators' proposals were challenged.

  •

    Data Power Systems Limited and Or v Safehosts (London) Limited and Anor [2013] EWHC 2479 (Ch)

    In this case the High Court refused an application for an administration order and instead appointed a provisional liquidator. There was no substantive evidence that one of the statutory purposes of administration could be achieved. Play This case made it clear that where it is merely asserted that one of the statutory purposes of administration is achievable, that will not be sufficient evidence that one of those purposes is indeed achievable, even if the assertion is made by a qualified insolvency practitioner. There was no application before the court for the appointment of a provisional liquidator, yet the court treated the administration application as a winding up petition, despite the fact that no application had been made for it to do so. It was able to do so due to its power to make such order as it thought fit under section 125 Insolvency Act 1986. Its power to do so came from the effect of paragraph 13 (1)(e) of Schedule B1 to the Insolvency Act 1986, which states that "On hearing an administration application, the court may treat the application as a winding up petition and make any order which the court could make under section 125.