The majority creditors of a company in administration applied for the replacement of its administrators because of an alleged conflict of interest. They claimed that the administrators could not properly pursue claims against the company’s directors for reviewable transactions, which were the main assets in the administration, because they had advised the directors to enter into them.
While the administrators accepted that there was, in theory, a conflict of interest, they argued that it could be managed via the appointment of a second set of so-called “conflict administrators” to handle certain functions of the administration (including, for example, any potential settlement of the claims). They also argued that the application was adverse to the interests of other creditors.
The court granted the application and replaced the current administrators. The applicants’ concerns about the administrators’ conflict of interest, and the acrimonious conduct of the administration since it was raised, were well-founded. The conflict could not be managed merely by the appointment of conflict administrators, because pursuing the claims was the remaining, principal workstream in the administration.
The decision demonstrates that certain conflicts are so fundamental that they cannot be resolved by the appointment of conflict administrators, but require the removal and replacement of the incumbent administrators.
BTI 2014 LLC v O'Connell [2025] EWHC 2115 (Ch)
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