James Douglas Ernle Money and Steven Edward Butt (as Joint Administrators of Central Properties Holdings Ltd ((in Administration))
| Jurisdiction | England & Wales |
| Judge | Curl |
| Judgment Date | 14 April 2023 |
| Neutral Citation | [2023] EWHC 829 (Ch) |
| Docket Number | Case No: CR-2020-000721 |
| Court | Chancery Division |
[2023] EWHC 829 (Ch)
DEPUTY ICC JUDGE Curl KC
Case No: CR-2020-000721
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF CENTRAL PROPERTIES HOLDINGS LIMITED (IN ADMINISTRATION)
Royal Courts of Justice, Rolls Building,
Fetter Lane, London, EC4A 1NL
Morgan Bowen, solicitor of Mills & Reeve LLP, for the Applicants
Hearing date: 25 January 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on Friday 14 April 2023 by circulation to the parties or their representatives by email and release to the National Archives
Deputy ICC Judge Curl KC:
An application made by the joint administrators (“Administrators”) of Central Properties Holdings Limited (in administration) (“Company”) dated 22 December 2022 seeking various relief came before the court on 25 January 2023. As things stood at the hearing, the administration of the Company was due to end on 5 February 2023. Having heard the submissions of Mr Bowen concerning the need for an extension of the Administrators' term of office in order for a CVA to be implemented, I made an order on that occasion extending the administration to 5 August 2024. As the other relief sought by the Administrators was out of the ordinary and the matter had only been listed for 15 minutes in a busy list, I reserved my judgment on the balance of the application.
This judgment concerns the further relief sought by the Administrators. They seek an order providing for (a) the termination of the administration pursuant to para 79 of Sch B1 to the Insolvency Act 1986 (“IA 1986”) conditional upon the successful completion of the Company's CVA; and (b) the discharge of the Administrators from liability conditional upon the termination of the administration in accordance with (a). The circumstances in which that relief is sought are as follows.
The facts
The Company is a property development company incorporated in Guernsey in April 2017. Mr Alkadhi was its sole director and shareholder. The Company borrowed £10 million on an unsecured basis from UB Group FZE ( “UB Group”) in 2017, which was used to purchase properties. Subsequently, the Company entered into a loan agreement and debenture with QIB (UK) Plc ( “QIB”) in May 2018 and another with Octane Property Finance Limited ( “Octane”) in April 2019. Upon the Company encountering liquidity difficulties in the summer of 2019, and UB Group learning for the first time of the Company's indebtedness to QIB and Octane, Knightsbridge Property Holdings Limited ( “Knightsbridge”), which is a company associated with UB Group, took an assignment of Octane's rights in January 2020. Knightsbridge then applied to court for an administration order, which was granted by His Honour Judge Cooke (sitting as a High Court judge) on 6 February 2020. Knightsbridge subsequently took an assignment of QIB's rights in March 2020. Mr Alkadhi was made bankrupt on the petition of UB Group on 6 November 2020.
Knightsbridge is the Company's only secured creditor. The unsecured claims (in the total sum of £12,931,885) have not yet been adjudicated. On any view UB Group is the largest unsecured creditor and will account for at least 94.82% of all such claims.
The administration has involved the completion of development works, sales and lettings of properties, and investigation work relating to the conduct of Mr Alkadhi. A one year extension to the Administrators' term of office (to 5 February 2022) was made with creditor consent under para 76(2)(b) and a further one year extension (to 5 February 2023) was subsequently granted by the court under para 76(2)(a) of Sch B1. As noted above, I granted a further extension to 5 August 2024 under para 76(2)(a) at the hearing on 25 January 2023.
It is proposed that the Company should make a solvent exit from administration via a CVA. The CVA was approved on 23 December 2022. Under the CVA, Knightsbridge will pay £57,580 to the supervisors (who are the same individuals as the Administrators) within one month of its approval. UB Group will release its claims against the Company, although neither Knightsbridge nor UB Group will participate in any dividends in the CVA.
Following payment of the remaining costs and expenses of the administration and of the CVA, the unsecured creditors other than UB Group will have their claims adjudicated and paid pari passu. It is intended that the distribution will be made within six months of the approval of the CVA (i.e. by 23 June 2023) but the Administrators anticipate the possibility of a delay if there is any dispute in relation to the adjudication of claims. As to this, the Administrators have identified in their supporting evidence what is described as “a considerable lack of clarity” in relation to two of the unsecured claims and a further question mark over another. The Administrators have rightly drawn to the court's attention the possibility that there may be a dispute over their adjudication in the CVA.
It is proposed that the Administrators will remain in place until after the CVA has successfully completed. I am told that this is in order to obtain the continuing benefit of the moratorium and to prevent the Company returning to the control of its directors prior to the completion of the CVA.
The relief sought
The Administrators' position was as follows. An administrator appointed out of court under paras 14 or 22 of Sch B1 may terminate an administration under para 80 of Sch B1 where they think that the purpose of administration has been sufficiently achieved by filing a notice with the court and the registrar of companies. That method of termination is not available to the Administrators because they were appointed by a court order. Where the relevant conditions are satisfied, an administrator appointed by a court order may move a company from administration to CVL under para 83, or from administration to dissolution under para 84, without a further court order: Re Ballast plc (in administration) [2004] EWHC 2356 (Ch), [2005] 1 All ER 630. Otherwise, an administrators appointed by the court requires a further order of the court to bring the administration to an end under para 79 of Sch B1, sub-para (1) of which provides that on the application of an administrator, the court may provide for the appointment of an administrator to cease to have effect from a specified time.
In the present case, the Administrators do not propose to exit into either liquidation or dissolution but instead anticipate (subject to the successful completion of the CVA) a solvent exit from administration. Accordingly, they will require an order of the court under para 79 of Sch B1 in order to end the administration. The Administrators invite the court to make a prospective...
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