Application for an administration order

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Chapter 10

Application for an Administration Order

OBJECTIVE

An administration application may be made to a High Court judge under paragraph 12 of Schedule B1 to the Insolvency Act 1986 by all or any of the directors, the company or any creditor of the company. Whilst both the company and the directors collectively¹would normally be entitled to appoint an administrator using the filing procedure, if a winding up petition has been presented, they can only appoint an administrator by applying for a court order.

The administration order should be granted if the court is satisfied that the company is or is likely to become unable to pay its debts, and that the administration order is reasonably likely to achieve the purpose of administration.²Those purposes are either: (1) the rescue of the company as a going concern; or if the administrator cannot (2) he must achieve a better result for creditors as a whole than would be obtained on winding up; or, if he cannot
(3) he should sell the company assets to distribute to the secured creditors, provided he does not harm the interests of the creditors as a whole.

APPLICATION

Comp 8. An administration application must be made in accordance with rule 3.3 of the Insolvency (England and Wales) Rules 2016, as contained in the key statutory provisions section of this chapter. As set out in rule 3.3, the application notice:

ƒ must be headed ‘Administration application’;
ƒ must identify the company immediately below the heading:

– in the case of a registered company, by giving its registered name;
– if incorporated in England and Wales, by giving its registered number; – if incorporated outside the United Kingdom, by stating the country in which it is incorporated and giving its national registered number and the number, if any, under which it is registered as an overseas company under Part 34 of the Companies Act 2006;

¹Any appointment of an administrator ‘by the directors’ on paper or by the court requires a resolution of a majority of directors that the company is placed into administration passed at a board meeting: Minmar (929) Ltd v Khaltschi [2011] EWHC 1159 (Ch).

²Re AA Mutual International Insurance Ltd [2004] EWHC 2430 (Ch), [2005] 2 BCLC 8.

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– in the case of an unregistered company, by giving its name and the postal address of any principal place of business;

ƒ must state the name of the applicant;
ƒ must set out a statement whether the application is being made by:

– the company under paragraph 12(1)(a) of Schedule B1;
– the directors of the company under paragraph 12(1)(b) of Schedule B1; – a single creditor under paragraph 12(1)(c) of Schedule B1;
– a creditor under paragraph 12(1)(c) of Schedule B1 on behalf of that creditor and others;
– the holder of a qualifying floating charge under paragraph 35 or paragraph 37 of Schedule B1 (specifying which),
– the liquidator of the company under paragraph 38 of Schedule B1;
– the supervisor of a CVA under section 7(4)(b); or
– a designated officer of a magistrates’ court under section 87A of the

Magistrates’ Courts Act 1980;

ƒ if the application is made by a creditor on behalf of that creditor and others, it must state the names of the others;

ƒ if the application is made by the holder of a qualifying floating charge, it must state details of the charge including the date of the charge, the date on which it was registered and the maximum amount if any secured by the charge;

ƒ if the company is registered under the Companies Act, it must state:

– any issued and called-up capital, the number of shares into which the capital is divided, the nominal value of each share and the amount of capital paid up or treated as paid up; or

– that it is a company limited by guarantee;

ƒ must state particulars of the principal business carried on by the company; ƒ must set out a statement whether the company is an Article 1.2 undertaking; ƒ must set out a statement whether the proceedings flowing from the appointment will be main, secondary, territorial or non-EU³proceedings and that the reasons for the statement are set out in the witness statement in support of the application made under rule 3.6;
ƒ except where the applicant is the holder of a qualifying floating charge and is making the application under paragraph 35 of Schedule B1, it must set out a statement that the applicant believes, for the reasons set out in the witness statement in support of the application that the company is, or is likely to become, unable to pay its debts;
ƒ must state the name and address of the proposed administrator;
ƒ must state the address for service of the applicant;
ƒ must state a request by applicant that the court:

³This reflects the applicable Regulations changing to the EU Insolvency Regulation 2015/848:
Insolvency Amendment (EU 2015/848) Regulations 2017.

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– make an administration order in relation to the company;
– appoint the proposed person to be administrator; and
– make such ancillary order as the applicant may request, and such other order as the court thinks appropriate;

ƒ must be authenticated by the applicant or the applicant’s solicitor; ƒ must state the date of the application.

The application notice, together with the consent of the proposed administrator and the witness statement in support needs to be presented at the Chambers of the Registrar of the Companies Court, Royal Courts of Justice, 7 Rolls Buildings, Fetter Lane, London EC4A 1NL or at a Chancery District Registry or a county court with jurisdiction to wind up companies. Before the application notice is presented the central index of winding up petitions at 7 Rolls Buildings (telephone 0906 754 0043) should be checked. If an existing petition is already current against the company, the applicant should apply that this petition is dismissed as part of the relief sought and the petitioner should be served (see below).

Sufficient copies should be provided to allow the court to seal and date stamp sufficient copies for service (see below).

COURT FEES

The court fee for an administration application is £280.⁴

CONSENT OF THE PROPOSED ADMINISTRATOR

The Insolvency (England and Wales) Rules 2016 do not provide a replacement for Form 2.2B; however, a modified Form 2.2B is reproduced at 10.2 (Statement of the proposed administrator), following which satisfies the requirements of rule
3.2 of the 2016 Rules. The proposed administrator needs to sign this confirming his details, the details of any prior relationship he has had with the company, that he is prepared to act as administrator and that he considers that it is reasonably likely that at least one of the objectives can be achieved. If there is more than one proposed administrator, each should sign a separate Form 2.2B and all the forms should be filed and served with the administration application notice.⁵

THE WITNESS STATEMENT

A witness statement will need to be filed. This will need to address:⁶

ƒ who the deponent is and what his locus is to make the application;

⁴Paragraph 3.2 of Schedule 1 to the Civil Proceedings Fees Order 2008.

⁵Rule 3.2 of the Insolvency (England and Wales) Rules 2016.

⁶Rule 3.6 of the Insolvency (England and Wales) Rules 2016. For who is eligible to be the deponent, see rule 3.6(1) of the Insolvency (England and Wales) Rules 2016.

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ƒ that the applicant believes that the company is or is likely to become unable to pay its debts as they fall due;⁷

ƒ a statement of the company’s financial position including (to the best of the applicant’s knowledge and belief) the company’s assets and liabilities, including contingent and prospective liabilities;

ƒ what security it is believed that the creditors hold over the company;
ƒ whether any of the security held entitles the holder to appoint an administrator or administrative receiver;
ƒ what other insolvency proceedings have been initiated in relation to the company and, in particular, whether a petition has been presented to wind up the company;
ƒ where more than one person is to be appointed as administrator, which functions are to be undertaken jointly and where any functions are not to be undertaken jointly and which functions are to be exercised by any or all of the administrators;⁸

ƒ whether or not an administrative receiver has been appointed;
ƒ whether the EU Insolvency Regulation 2015/848⁹applies and if so, why; ƒ if the EU Insolvency Regulation¹⁰applies, whether the proceedings will be main proceedings, secondary or territorial proceedings and why;
ƒ what the comparative benefits are of the company being put into administration over liquidation (and why);
ƒ any material that might be germane to the court’s decision as to whether or not to appoint an administrator.

Any supporting evidence should be exhibited.

SERVICE ON INTERESTED PARTIES

Service of a copy of the sealed application, the witness statement in support and the administrator’s consent need to be effected by either the applicant or by someone on his behalf not less than 5 business days before the date fixed for the hearing on all the interested parties.¹¹

Such interested parties include:

ƒ the administrative receiver;
ƒ any person petitioning for the winding up of the company;

⁷Where the application for an administration order is made by the floating charge holder, he does not need to show the company is insolvent, but only that he could appoint an administrator under paragraph 35 of Schedule B1 to the Insolvency Act 1986 and rule 3.3 of the...