The recent case of Re CDI Realisations Ltd [2025] 12 WLUK 462 addresses the question of whose consent is required in order for administrators to secure an extension of their appointment period.
Under Schedule B1, Paragraph 76 of the Insolvency Act 1986, the appointment of an administrator shall automatically cease on the date 1 year on from the date of appointment, unless extended either by an order of the court or by the consent of the creditors.
On the facts, the administrators were appointed in December 2023 in relation to two companies (C1 and C2).
In the administrator’s early proposals for the managing of the administration, they indicated the potential for the following payments to be made:
- In relation to C1, the administrators originally anticipated that HMRC might receive a dividend as a preferential creditor (the C1 preferential creditor), and
- In relation to C2, the administrators identified a legal claim against a supplier that they considered might give rise to a dividend payment to a third party as the C2 preferential creditor.
The proposals also identified a secured creditor to whom a payment would be made once any preferential creditors had been dealt with, and a further intercompany distribution once a rates rebate had been received from HMRC.
Prior to the expiry of the initial administration period, HMRC confirmed to the administrators that it didn't have a preferential claim against C1. Similarly the administrators (upon investigating C2’s potential claim against the supplier) concluded that C2’s claim was not worth pursuing. Consequently, as the administration unfolder there were in fact no preferential creditor claims to be managed.
The administrators sought and secured the consent of the companies’ secured creditor and secured a 12 month extension to their period of appointment in accordance with the process set out in paragraph 76(2)(b). The consent of the C1 and C2 preferential creditors was not sought, the administrators having concluded against the need to make any dispositions in their favour.
A question arose as to whether the extension was valid on the grounds that not all of the potential creditors initially identified by the administrators had been asked for their consent to the extension. The court was, therefore, asked to consider what the impact (if any) the lack of consent from the preferential creditors had on the validity of the extension to the administration period.
The court considered the case law on this issue and concluded that the relevant time for considering whose consent is required when seeking an extension is the time at which the extension was sought.
At the time at which the extension was sought, HMRC had confirmed that it didn't have a preferential claim and the administrators had concluded against pursuing C2’s supplier claim.
Notwithstanding the fact that the administrators had initially contemplated the potential for preferential creditors to exist, at the time at which the extension was sought there were in fact no preferential creditors (or potential preferential creditors to consider). The administrators had, therefore, secured the consent of all creditors interested in the administration at the relevant time.
Accordingly, the court affirmed the validity of the extension.
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