An out of court appointment of joint administrators of the company, a one-man building company, had been made by the principal shareholder’s executors at a time when, unknown to them, a creditor’s petition for the winding up of the company had already been presented. By paragraph 25 of Schedule B1, an administrator may not be appointed under paragraph 22 if a petition for the winding up of the company has been presented and not disposed of.
Held: The petition was ‘presented’ when it was delivered to the court, and not when it was later sealed and issued.
Nor could the position be regularised using rule 7.55: ‘ I do not consider that an appointment by the company or by the directors under paragraph 22 is an ‘insolvency proceeding’ for the purpose of the rule. As was pointed out by Sir Donald Nicholls V.-C. in Re A Debtor (No.88 of 1991), [1992] 4 All ER 301, [1993] Ch 286, a distinction has to be drawn between legal proceedings as such and the doing of acts which are part of the statutorily prescribed procedure for obtaining relief. An out-of-court appointment is part of the statutory procedure that is necessary to obtain the remedies and reliefs afforded by Schedule B1 but does not of itself initiate legal proceedings. Legal proceedings are initiated when the administrator makes an application under paragraph 63 of Schedule B1 or otherwise, but until then he is an officer of the court appointed out of court and subject to obligations to report to the court.
Secondly, I accept the submission that failure to satisfy the statutory criteria for the exercise of the power to appoint represents a fundamental flaw which cannot be remedied under a regularisation provision, a principle enunciated in Re Awan [2000] BPIR, 241.
Thirdly, I accept that it is difficult to see how an invalid appointment could occasion an ‘injustice’, and if that invalidating does occasion an injustice how that is ‘remedied’ by an order retrospectively validating the appointment.
So I do not consider that rule 7.55 provides an answer.’
Norris QC J
[2006] EWHC 3549 (Ch), [2008] 1 BCLC 245, [2007] BCC 712, [2007] 3 All ER 776, [2007] 3 All ER 776
Bailii
Insolvency Rules 1986 7.55
England and Wales
Cited by:
Cited – In re Frontsouth (Witham) Ltd and Another ChD 30-Jun-2011
The court was asked to make a retrospective appointment of a company administrator.
Held: Henderson J (in a reserved judgement) said that he shared Morgan J’s misgivings, but like him regarded the jurisdiction as a useful one and was prepared . .
Cited – In re Care Matters Partnership Ltd ChD 7-Oct-2011
An application was made for the appointment of administrators with retrospective effect.
Held: ‘there are two separate questions. The first question is whether an administration order should be made at all. This requires both the satisfaction . .
These lists may be incomplete.
Updated: 08 July 2021; Ref: scu.341776 br>