Extension of administrators’ appointment valid

Published on
1 min read

The joint administrators sought to extend the term of their appointment by a year, by seeking the consent of the secured and preferential creditors. They sent a notice to the preferential creditors, with a covering letter and a progress report posted on the online creditors' portal. They obtained the requisite voting majorities.

In the course of preparing applications for further extensions, the administrators identified potential defects in the extension by consent; they therefore sought declarations as to the validity of that extension.

The court held that the failure to expressly include reasons within the notice to creditors was a procedural defect in the notice.

Under r.12.64, insolvency proceedings could not be invalidated for a defect unless the court considered that a substantial injustice would be caused.

In this case, those receiving the notice could easily have discovered the reasons for the proposed extension of time, which were fairly obvious. The creditors had not been prejudiced by the lack of reasons as they appeared in abbreviated form in the progress report. If any creditor had questions, they could easily ask them via the portal.

The court declared that the procedural defect did not invalidate the extension, and also granted the administrators a further one-year extension of term to complete the administration.

Caversham Finance Ltd, Re [2022] WL 00609489

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