Insolvency Rules 2016 - Out of Court Appointment of Administrators
Friday, 21st April 2017
The out of Court appointment processes are broadly similar to the processes under the Insolvency Rules 1986 with some minor amendments. The most significant change is the abolition of the prescribed forms for appointment documents.
Whatever type of appointment (out of Court by company/directors, out of Court by Qualifying Floating Charge Holder ("QFCH"), application to Court), the Consent to Act form and contents is dealt with by r3.2.
Appointment out of Court by directors/the Company
Changes include that a Consent to Act must be authenticated (within the meaning of r1.5) and dated by each proposed Administrator, that the para100(2) statement is now to be contained within the Notice of Appointment, and that the Notice of Appointment must be delivered (within the meaning of r1.40 - 1.53) to the Administrator (although a notice of intention must still be served on any QFCHs).
If a notice of intention is filed and served, then appointment may take place on that NOI notwithstanding any winding up petition filed after the NOI. This is a change introduced in the Act by way of the Deregulation Act 2015, and the new rules make the position very clear.
Appointment out of Court by a Qualifying Floating Chargeholder
The process is relatively unchanged and is now contained in rules 3.16 onwards. The main issue is the removal of the prescribed forms for the Notice of Intention, the Consent to Act, the Notice of Appointment (filed within Court hours), the Notice of Appointment (filed outside Court hours) and the reasons for an appointment outside hours. Prior QFCH consent and para 100(2) statements are not prescribed (as before).
Changes include the requirement for the sealed Notice of Appointment to be delivered (within the meaning of r1.40 - 1.53) to the Administrator (and any applicant for Administration and the Court in which the application is made).
There is also a very detailed procedure set out for the appointment outside Court hours in r3.20 - 3.22.
Out of Court Appointment documents
The Court is not expected to produce out of Court appointment documents (because the process is not required to involve the Court beyond receiving, stamping and dating/timing the documents).
In view of decisions in cases such as Minmar etc, and the fact that the new rules do not contain any provision allowing for 'minor' defects to be easily corrected/validated by the Court, it is going to be essential that appointment is approached very carefully. The team at Ashfords is well placed to advise office holders on appointment under the new rules.