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Application by an administrative receiver for an indemnity by reason of the invalidity of his appointment

Document Cited authorities 9 Cited in Related
Vincent
AuthorMark Watson-Gandy
Pages281-291
Chapter 19


Application by an Administrative Receiver for an Indemnity by Reason of the Invalidity of his Appointment

OBJECTIVE

An administrative receiver may be appointed out of court and more rarely by court order.

Challenges to the appointment of administrative receivers are becoming more common. The Enterprise Act 2002 significantly curtailed the ability of debenture holders to validly appoint administrative receivers despite the apparent powers under the debenture. Moreover, the appointment may also prove to be invalid through the failure to register the charge under the debenture.

Where the appointment is discovered to be invalid (whether by reason of the invalidity of the instrument or otherwise), the administrative receiver may ask the court to require the person who appointed him to indemnify him from liability arising out of the invalidity of his appointment.1This is important for the administrative receiver because, if his appointment proves to be invalid, any acts he has undertaken will have been as a trespasser.2

APPLICATION

The application is made by application notice on Form IAA to the registrar. The appointer should be named as respondent.

A copy of the application should be filed at court, with one additional copy for each party to be served.3

1Section 34 of the Insolvency Act 1986.

2For an unsuccessful claim for unlawful interference with contractual relations, see OBG Ltd v

Allan [2007] UKHL 21, [2007] 2 WLR 920. See also Ahmad v Bank of Scotland [2014] EWHC 4611 (Ch).

3Rule 12.7 of the Insolvency (England and Wales) Rules 2016.

282 Corporate Insolvency Practice

COURT FEES

Where fresh proceedings need to be brought, a court fee of £280 is payable.4If the application can be made as part of exisiting proceedings and the application is on notice to other parties, a court fee of £155 is payable.5Where the application is made by consent or without notice in existing proceedings, a court fee of £50 is payable.6

EVIDENCE

The administrative receiver should file a witness statement in support. This should address:

ƒ the identity of the applicant;
ƒ the capacity in which the applicant makes this application;
ƒ the date the company was incorporated;
ƒ the registered office of the company;
ƒ the nominal share capital of the company;
ƒ the issued share capital of the company;
ƒ the objects of the company;
ƒ the date of the debenture and charge;
ƒ that the appointer appointed him as administrative receiver;
ƒ the date of the purported appointment;
ƒ the circumstances of his purported appointment as administrative receiver; ƒ the reason why the appointment as administrative receiver is invalid;
ƒ the date and circumstances in which the administrative receiver first discovered that his appointment was invalid;
ƒ that he seeks to be indemnified for liabilities arising from the invalidity of his appointment.

The witness statement should exhibit:

ƒ evidence of the administrative receiver’s appointment;
ƒ a copy of the debenture and charge;
ƒ any correspondence relating to the invalidity of the administrative receiver’s appointment;
ƒ any correspondence relating to any request by the administrative receiver that the appointer will indemnify him and not object to an order in the terms sought.

4Paragraph 3.5 of Schedule 1 to the Civil Proceedings Fees Order 2008.

5Paragraph 3.12 of Schedule 1 to the Civil Proceedings Fees Order 2008.

6Paragraph 3.11 of Schedule 1 to the Civil Proceedings Fees Order 2008.

SERVICE

The application should be served on the appointer.

The usual rule is that, subject to any other express provision, the application must be served at least 14 days before the date fixed for the hearing.7However, the court does have power, in cases of...

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