Administrators’ duties and the sale of Force India

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2 min read

Concerned that time was of the essence and posed with the real danger of staff members being poached by other championship teams, administrators of a F1 team wanted to complete an urgent rescue. To be viable, any rescue plan would need the approval of numerous F1 stakeholders.

Upon appointment, the administrators set up a data room, met or spoke with various interested parties (including the claimant, PJSC Uralkali (Uralkali) and the ultimate purchaser, Lawrence Stroll), secured emergency funding, and instructed solicitors to advise on the sale process.

Uralkali claimed that the administrators failed to conduct a fair and proper sale process.

All the claims were dismissed.

Administrators can take some comfort in the court’s findings, including that:

  • The administrators did nothing at any meeting with Uralkali, or in email, or generally, to assume a personal responsibility to him. Indeed, had such a duty of care been owed, it would have been owed to a broad and indeterminate group of potential bidders and stakeholders
  • The courts should be slow to impose a duty of care on an administrator which might fetter his discretion to make decisions in accordance with, or even subvert, the statutory purposes of administration
  • It was not persuaded that, in making representations about the bidding process, the administrators were providing a service to the bidders. The sales process was carried out to achieve a statutory purpose. It was a furtherance of their duties to the company and its creditors; no additional duties arise
  • The administrators did not disclose any confidential information. It is not necessary to provide specific notes to justify the decision; emails, letters and disclosed legal advice were sufficient to explain the decision process
  • Claims in negligence are premised on the assumption of responsibility and there is no basis of the assertion that one joint office-holder is liable for the wrongs of the other. This is even more the case when the lead administrator is a seasoned professional and backed by an experienced legal team. 

It is worth noting that the judgment drew attention to the fact that Uralkali, as a bidder for but not a creditor of the company, did not have standing to challenge the administrators’ conduct under paragraphs 74 and 75 of Schedule B1 IA 1986.

PJSC Uralkali v Geoffrey Rowley and Jason Baker (as former joint administrators of Force India Formula One Team Limited (in liquidation) [2020] EWHC 3442 (Ch)

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