New guidance on defectively appointed administrators

The recent case of Care Matters Partnership has clarified the jurisdiction of the court (first recognised in G-Tech Construction Ltd [2007] BPIR 1275) to order the retrospective appointment of an administrator where a purported administrator had not previously been validly appointed. Mr Justice Norris held that a party applying for a retrospective order must be able to show that the prospective acts of the person to be appointed as administrator are reasonably likely to satisfy the statutory purposes of administration; if all that is left for the purported administrators to do is to dissolve the company then that is insufficient. The G-Tech jurisdiction is therefore narrower than had previously been thought and on its own facts, G-Tech appears to have been wrongly decided.

Mr Justice Norris indicated that this case raised 3 points concerning the appointment of administrators require definitive determination by a higher court:

Was the Minmar case [2011] BCC 485 (the effect of which is to render many out of court appointments invalid) correctly decided, especially in the light of the apparently conflicting authority at first instance?

• If an administrator’s appointment is invalid, may paragraph 104 of Schedule B1 of the Insolvency Act be used to correct a defect in the appointment? Mr Justice Norris indicated that he would be prepared to accept this.
• If the court does have jurisdiction to make retrospective administration orders following G-Tech, can a retrospective order be made in circumstances where the purported administrators have already finished the job and all that is left is to dissolve the company or otherwise exit administration?

Whilst there is to be no appeal of Care Matters Partnership, there are already indications that a group action may soon be undertaken to obtain judicial guidance on these 3 areas.

Daniel Warents acted for the administrator in Care Matters Partnership.