The directors decided that the company was insolvent and should be put into administration. The Company was regulated by the Financial Conduct Authority (FCA) so under s.362A FSMA it could only be placed into administration with the prior consent of the FCA.
On 10 January 2020 a notice of appointment was filed and it was assumed that the appointment of the administrators was valid. The FCA’s register had been searched for the Company’s name “A.R.G” and no record of the Company was found but in March 2020 it was revealed that the Company was in fact on the FCA’s register as “ARG” not “A.R.G”.
Following this realisation the FCA gave consent for the Company to be put into administration on 5 March 2020 and the directors applied to the court for a retrospective appointment of the administrators.
In making his decision the Judge examined a line of cases on this issue and ultimately followed the approach of Mann J in Pettit v Bradford Bulls (Northern) Ltd (In Administration) [2016] EWHC 3557 (Ch) finding that it was arguable that there was no power to appoint the administrators without the consent of the FCA and that the purported appointment was a nullity. It could not be remedied by retrospective consent from the FCA after the appointment as the consent went to the genesis of the power to appoint in the first place and was not a mere procedural defect.
Having found that the appointment was a nullity the Judge addressed the question of whether the appointment should be cured by a retrospective order.
A retrospective order was made after considering the statutory conditions for making the order. The FCA did not object to the retrospective appointment but did not endorse or validate the actions of the administrators to the date of the order. In making the order the Judge also drew attention to the fact that the breach by the directors had been inadvertent, validating the appointment would not cause any specific prejudice and the administration had been, on the whole, beneficial to the creditors.
The Judge did note that the court’s jurisdiction regarding retrospective appointments has been questioned but has also been relied upon, and exercised consistently at first instance for many years and, in doing so agreed with Mann J in Bradford Bulls that a challenge to the court’s jurisdiction should be raised in the Court of Appeal.
Arg (Mansfield) Ltd Sub Nom (1) Jacqueline Roma Gregory (2) Allan Russell Gregory (3) Paul Alan Unwin V Arg (Mansfield) Ltd (2020)
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