Owing to a lacuna in the law, when the companies entered CVL, the creditors' entitlement to statutory interest was lost (as interest accruing during a period of administration is not paid in a subsequent liquidation). However, the applicants paid the creditors statutory interest on the basis that it was cost effective to do so; they did not apply for permission to make distributions.
The applicants confirmed that they did not know of any claims against, or which could be made against, them arising out of their conduct as administrators or of any facts or matters which could give rise to a claim for misfeasance. They confirmed to the court that, whilst they did not have the consent of all secured creditors, they had paid statutory interest (having regard for "The First Review of the Insolvency [England and Wales] Rules 2016" which includes a proposed amendment for notices of decision procedures).
Notwithstanding that the interest had been paid, the court found that misfeasance was a high hurdle to cross and there were no clear grounds for any such claim in this case, and the orders discharging them from liability were made.
As an aside, the administrators had sought a one-year extension to the administration and obtained the consent of the unsecured creditors, but not the secured creditors. The court did not consider it necessary to consider the validity of the extension.
AGL Realisations Ltd, Re [2022] 6 WLUK 330
Our content explained
Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.