Cambridge Analytica: Joint Administrators appointed as Liquidators notwithstanding creditor opposition

In March 2018, Professor Carroll (an American academic) issued claims against SCL Group Limited, SCL Elections Limited and Cambridge Analytica (UK) Limited founded on the Data Protection Act 1998 (“DPA”).

In May 2018, Messrs Green and Newman were appointed as Joint Administrators of 6 companies (including those mentioned above), collectively known as Cambridge Analytica.  SCL Elections subsequently pleaded guilty to breaching the DPA (due to a failure to comply with an ICO Enforcement Notice), resulting in a fine and costs, which rank as unsecured claims in the administration.

In August 2018, the Joint Administrators presented petitions for the companies to enter liquidation and for their release as administrators.  Professor Carroll objected on the grounds that the Joint Administrators were “insufficiently objective”.  He subsequently questioned their integrity.

Summary findings: the court appointed the Joint Administrators to be liquidators as:

  1. it was conductive to the proper operation of the liquidation;
  2. decisions (such as the response to the ICO’s Enforcement Notice) were commercial judgements not sectional preferences;
  3. the Joint Administrators were appointed by the companies and had the support of the majority of creditors as candidate liquidators.  Professor Carroll’s interests were not those of a creditor but based on his desire to advance his view of the public interest;
  4. a sole objector (with a claim of c.£20,000 amongst claims of c.£800,000) should not be able to overrule the wishes of the majority of creditors; and
  5. the office holders would continue to act in the interests of the creditors of a whole.  Whilst this approach had led them to give too little weight to Carroll’s legitimate interests, the misjudgement was not sufficient to block their appointment.

Green and Newman v SCL Group and other companies: [2019] EWHC 954 (Ch)

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