In re Luna Metal Products Ltd (in Administration): CA 14 Dec 2006

The administrators held cash. They proposed a distribution giving creditors who would on a winding up be preferential, full preference. They appealed refusal by the court to sanction the proposal.
Held: The court had no power to make such an order. From the cases there were three sources for the court’s power to sanction, or order, an administrator to make pro rata payments to creditors, section 14(3), the court’s inheremt jurisdiction, and the powers in Schedule 1 and the court’s powers in 18(3). Section 14(3) envisaged the court giving an administrator directions but they had to be in connection with the carrying out of his functions which were governed by section 8(3) of, and Schedule 1 to the 1986 Act did not extend to paying out creditors. Section 18(3) could not be used independently of an application under 18(1). The court did not terefore have the power sought. However if the distribution was sought as part of an the now amended application under 18(1) for the completion of the administration, the distribution would avoid the need for a winding up, and would save costs.


Lord Justice Tuckey, Lord Justice Carnwath and Lord Justice Neuberger


Times 27-Dec-2006


Insolvency Act 1986 18(3)


England and Wales


CitedIn Re Powerstore (Trading) Ltd; In Re Homepower Stores Ltd ChD 18-Jun-1997
A court has no jurisdiction to make an order which seeks to bind future decisions of future liquidator in favour of group of creditors. . .
CitedStallwood v David and Another QBD 25-Oct-2006
The parties experts had met and agreed evidence, but the claimant’s expert later changed his mind. She now appealed being refused permission to bring additional evidence.
Held: The meeting of experts was to encourage them to seek agreement. . .
CitedIn re Designer Room Ltd ChD 2005
. .
Not followedIn re Mark One (Oxford Street) plc 1999
Jacob J referred to the inherent jurisdiction of the court with particular reference to Ex parte James. . .
ApprovedIn re UCT (UK) Ltd ChD 2001
Arden J was asked to approve aproposal that the company should go into voluntary liquidation, on the basis that, prior to that happening, the administrators would pay into a trust account in their own name a sum equal to the total amount owing to . .
Lists of cited by and citing cases may be incomplete.


Updated: 14 June 2022; Ref: scu.247765