Retrospective administration order limited to 364 days

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2 min read

A company entered administration on 17 January 2019.

The administrators purported to extend the one year administration period a further 12 months with the consent of the secured creditor so that the administration expired on 17 January 2021.

The administrators then obtained a court order granting them a further one year extension to 17 January 2022.

It subsequently transpired that there may have been lien holders whose interest constituted security and whose consent may have been required to be sought to the first extension from 17 January 2020 to 17 January 2021. The administrators therefore applied to court on 12 February 2021 seeking an order for administration with retrospective effect backdated to 17 January 2020, ie, a backdating of more than a year.

Applying a long line of first instance authority, the court held:

  • That it did have the jurisdiction to make a retrospective administration order; but
  • That para 79 of Schedule B1 to the Insolvency Act 1986 (which is to the effect that an order of the court extending an administrator’s term of office may not be made after the expiry of the administrator’s term of office) had the effect that a court cannot retrospectively extend an administration after the administration had expired and nor could the court make multiple retrospective administration orders to fill more than one year.
  • This had the effect that any retrospective administration order made by the court was time limited to 364 days, ie, backdated to 24 February 2020 meaning that there was a short period between 17 January and 24 February 2020 where there was no administration in effect. 

The court also considered a novel point about whether the proceedings were main proceedings under the EU Insolvency Regulation given that the administration order was made after Brexit but the backdating was to a date before Brexit. The court held that there could potentially be chaos if an English backdated order against the company could somehow change the nature of any prior opened EU proceedings and held that the proceedings should therefore be opened under the post-Brexit regime rather than under the Insolvency Regulation.

In re Mederco (Cardiff) Limited, first instance judgment 23 February 2021

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