Administration in UK Law

There seems to me no reason of policy why such obligations (which may or may not be in the interests of the administration) should be given priority over the company's other debts. As I have said, the purpose of administration under the 1986 Act was simply to impose a moratorium to allow time to find a way of saving the business or realising it to better advantage than in a liquidation.

Whether the circumstances are present which entitle the administrators to have recourse to paragraph 83 (in the case of Ballast and Investments) and 84 (in the case of Management) is for the administrators. The evidence discloses that the creditors have been informed of the joint administrators' wish so to proceed; none has objected.

In contrast, an administration is intended to be only an interim and temporary regime. There is to be a breathing-space while the company, under new management in the person of the administrator, seeks to achieve one or more of the purposes set out in section 8 (3).

(5) Thus it will normally be a sufficient ground for the grant of leave if significant loss would be caused to the lessor by a refusal. But if substantially greater loss would be caused to others by the grant of leave, or loss which is out of all proportion to the benefit which leave would confer on the lessor, that may outweigh the loss to the lessor caused by a refusal.

(6) In assessing these respective losses the court will have regard to matters such as: the financial position of the company, its ability to pay the rental arrears and the continuing rentals, the administrator's proposals, the period for which the administration order has already been in force and is expected to remain in force, the effect on the administration if leave were given, the effect on the applicant if leave were refused, the end result sought to be achieved by the administration, the prospects of that result being achieved, and the history of the administration so far.

I have not, however, been persuaded that the payment is so necessary or incidental. It is a case where, as matters stand at present, the administrators propose to petition for the compulsory winding up of the company.

In these circumstances, waiver or correction does not arise. The Court has no jurisdiction to correct any errors, since relief can only be granted once insolvency proceedings have begun. If the appointment is invalid, there are no insolvency proceedings.