Can directors appoint administrators out of hours?

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Another update, another reported decision on the validity of a directors’ appointment. Before the introduction of compulsory electronic filing, a notice of appointment had to be physically handed over the Court desk and sealed.

Before the introduction of compulsory electronic filing, a notice of appointment had to be physically handed over the Court desk and sealed.  If the Court desk was closed, a QFCH could appoint after hours if it complied with IR 3.20-3.23.  Everyone knew where they were.

Now documents can be filed at any time, and the Court provides an automated receipt and the notice endorsed with the date and time of filing.  So what happens if the directors file everything out of hours?  Is that valid, and if so, does the appointment take effect when the Court opens the following day, or when the documents are received?  In re HMV Ecommerce Limited, the directors filed the notice of appointment at 5.54pm on Friday 28 December, over 1 hour after the court counter had closed.  An automated receipt was sent 2 minutes later, and it was accepted at 8.23am on Monday 31 December.  Perhaps given the high profile nature of the appointment, a declaration was sought to confirm validity. 

The issue here is that paragraph 8.1 of the Insolvency Practice Direction requires documents to be filed electronically, but it also says that IR 3.20-3.23 still applies.  Those rules, amongst other matters, require a statement confirming the urgency of an out of hour’s appointment. 

Did the fact the appointment did not comply with those rules matter?  Not in this case.  The Practice Direction was ambiguous, but even if this was a defect, it was one which could nevertheless be cured.  The Court had no difficulty in holding that the appointment took effect when the documents were filed, which was 5.54pm on the Friday, not 8.24am on the Monday.  For now, documents filed out of hours by a director can be valid and effective at the point at which they are filed.  This is another example of the inconsistencies in the Insolvency Rules, but more tellingly, some of the real practical issues which can arise on a filing.

Wright & Others v HMV Ecommerce Limited and HMV Retail Limited [2019] EWHC 903

 

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