Court allows appointment of joint administrators as joint liquidators

The joint administrators of the company made an application seeking various orders, including that: (1) the company be wound up under the Insolvency Act 1986 and they be appointed as joint liquidators; and (2) their remuneration, as joint liquidators, should be fixed in advance as 20% of the value of any assets recovered in the liquidation.

The three issues before the court were whether:

  1. It was competent to apply for a winding-up order by note, rather than by petition.
  2. When invoking section140 of the 1986 Act, the court must appoint an interim liquidator first.
  3. It was appropriate to approve the liquidators' remuneration in advance.

The court found that it was appropriate to appoint a liquidator by way of note rather than a winding-up petition, as paragraph 79(4) of Schedule B1, Insolvency Act 1986 allows the court to make any order in an administration. The court held that there was a clear and obvious link between the exit from administration and entry into liquidation and a winding-up order was appropriate.

The court also held that s.140, when properly construed, empowered the court to appoint administrators as liquidators, not just interim liquidators. The court was satisfied that the joint administrators should be appointed as joint liquidators in circumstances where creditors had not objected to the administrators’ intention to have themselves appointed.

The court however refused to order the liquidator’s remuneration in advance, as the rules did not permit a claim in advance of work being done and there had been no attempt to predict the amount of work the liquidators would be required to undertake in order to assess whether 20% was reasonable.

In reference to Joint Administrators of Alexander Inglis and Son Ltd, Noters [2024] CSOH 12.

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