Administration – winding up – appointment of preferred liquidator – appointment of administrator for sole purpose of consenting to own appointment as liquidator
Rose J heard applications regarding a group of companies that were in administration. Angel Group Limited was the parent of seven subsidiaries. All of the companies owned substantial commercial and residential properties. Bank of Scotland funded the companies by way of substantial secured lending. The companies all had the same administrators.
The administrators contended they had claims that they wanted to investigate against the original owner and controller of the group, Ms Davey. Ms Davey contended that Bank of Scotland and the administrators artificially distressed the companies in order to push them into insolvency.
All parties agreed that the companies should move into liquidation; the two administrators should “bow out“; and four new liquidators should be appointed (two nominated by each of Bank of Scotland and Ms Davey). The two appointed by Bank of Scotland would be appointed “to complete the disposal of the companies’ assets and pursue any claims on the companies’ behalves against Ms Davey“; and the two appointed by Ms Davey would be appointed to “pursue any claims the companies have against the bank and certain other third parties“. To give effect to this carefully negotiated agreement, the parties made “a rather complicated set of applications” that were said to “stand or fall together as a package“.
Much of that package was relatively uncontroversial; thus it was appropriate to appoint the four prospective liquidators as new administrators and to wind up the companies as there was no dispute that they were unable to pay their debts and it was just and equitable that they be wound up.
Granting relief beyond this, however, Rose J agreed to appoint the four prospective liquidators as administrators for the limited role of giving consent to their own appointment as liquidators (under section 140 of the Insolvency Act 1986), in order to avoid the official receiver taking office as liquidator pending the process set out at section 136(2) and section 139 of the Insolvency Act 1986; and to approve a “memorandum of understanding” setting out the respective, limited obligations of the two sets of liquidators under section 168(3) of the Insolvency Act 1986.
The approach of Rose J illustrates the court’s general willingness to assist insolvency processes and, in particular, to adopt a flexible approach to a superficially inflexible statutory framework in order to achieve a commercial result.
