Failure to give notice of intention not fatal

Following a finding that the Applicant was a qualifying floating charge holder who should have been given notice by a company of the intention to appoint administrators, but was not, the Applicant applied for an order that the appointment of the administrators was invalid or, alternatively, if it was not, that the Applicants’ nominated insolvency practitioners be appointed as the company’s administrators.

The Judge had previously ordered that the out of court administration be concluded and that one of the original administrators and one of the Applicants’ nominations be appointed administrators by retrospective order, whilst the remaining issues were resolved.

The first issue was whether the appointment of the administrators commenced out of court by the company and continued by court order was valid. The Judge considered the long line of authorities on the question of whether the appointment of administrators should be validated following errors and omissions under Schedule B1 to the Insolvency Act 1986 and concluded that the administration would only be a nullity if there was a fundamental defect. The Judge found that the failure to give notice of intention to a QFC was not such a fundamental defect and did not invalidate the administrators’ appointment.

The Judge also went on to order that, on the evidence, the Applicant’s other nomination be appointed as the company’s administrator and the remaining administrator be removed.

Strategic Advantage SPC and others v Rutter and others [2020] EWHC 3171 (Ch)

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