Administration order - Administrator

Adjei and others v Law For All: Chancery Division, Companies Court (Mr Justice Norris): 19 October 2011

The defendant company went into administration, and an administration order was made in regard of it, dated to take effect as at the 28 July 2011. The directors gave notice of intention to appoint an administrator, and filed the appropriate Form 2.9B. Paragraph 8 of Form 2.9B, inter alia, required the directors to have given notice of intention to appoint in accordance with paragraph 26(1) of schedule B1 to the Insolvency Act 1986 (the act). That had not occurred.

No notice of intention to appoint had been given to the person entitled to appoint an administrator under paragraph 104 of schedule B1 to the act ('a qualifying charge holder'). Further, the notice of intention to appoint had not been correctly completed, as the definition of 'the appointor' had not been completed, and the relevant markings had not been made to indicate whether or not the company was an insurance undertaking.

Furthermore, the charge holder had not been served. The administrators, B and E, were advised that that might invalidate their appointment, and the directors therefore made an application for an administration order to take effect at the date of their original suspect appointment.

The issue arose as to whether the administrators had been validly appointed, and if not whether paragraph 104 of schedule B1 of the act could be used to correct the deficiencies in their appointment. The applicants submitted that the court should ratify or declare that their acts were valid or declare that they would be entitled to receive remuneration for their services.

The court ruled: A company would enter administration when the appointment of an administrator took effect, as per paragraph 1(2) of schedule B1 to the act (see [2] of the judgment).

On the facts, the company had been insolvent at the relevant times. There were no reasons in discretion why the administration order ought to be withheld. The effect of the order would be that the administrators would be treated as having been in office from 28 July 2011. There was no material difference between then and the date of making the administration order regarding the solvency of the company, the purpose of administration, the likelihood of achieving that purpose or the appropriateness of making the order.

There would be no need for the court to ratify or declare valid the acts of the administrators or declare that they would be entitled to receive remuneration for their services: in the circumstances, since the court did not know in detail what acts the administrators had carried out or what remuneration they claimed, there would be a strong reason not to do so. Whatever acts of administration that B and E had carried out as purported administrators, they were to be treated as having acted validly as administrators whilst doing so (see [17] - [19] of the judgment).

The company would therefore have entered administration on 28 July 2011. Orders would therefore be made regarding the time for holding the initial meeting of creditors and the times at which the administrators ought to circulate their proposals (see [20], [21] of the judgment).

Minmar Ltd v Khalatschi [2011] All ER (D) 99 (Oct) applied; Care Matters Partnership Ltd, Re [2011] All ER (D) 100 (Oct) applied; G-Tech Construction Limited [2007] BPIR 1275 considered; Derfshaw Ltd, Re [2011] All ER (D) 144 (Jun) considered; Frontsouth Ltd (in admin), Re [2011] All ER (D) 41 (Jul) considered.

Charlotte Cooke (instructed by Boyes Turner) for the applicants.