Key point

  • Purely voluntary redress payments are not caught by a paragraph 99 charge

The facts

The former administrators of a company applied for an order that, pursuant to paragraph 99 of Schedule B1 of the Insolvency Act 1986 (which provides that a former administrator’s remuneration shall be charged on and payable out of property of which he had custody or control immediately before cessation of his office), the unpaid balance of their fees be charged on and payable out of a redress payment which had been informally offered by Natwest relating to interest rate swaps entered into by the company in 2003.

After the company was dissolved in 2012, Natwest made a provisional determination of redress stating that, if the company was restored to the register, Natwest would make a formal offer of redress capable of acceptance by the company. In addition to requesting an order that the redress was charged under paragraph 99, the administrators also sought an order that Natwest pay the redress direct to them, without requiring the company to first be restored, arguing that they were the only ones with an economic interest in the redress payment (the floating charge holder having consented to the orders requested) and it would be quicker and cheaper than requiring restoration and enforcement.

The decision

Natwest was not under any obligation to pay the redress (it being an informal voluntary offer to pay), and therefore the redress payment was not an asset of the company falling under the paragraph 99 charge. It is proper for someone authorised to act on behalf of the company following restoration (its directors or a liquidator) to deal with collecting in and distributing assets, having regard to the rights of all creditors. In this case, prescribed part creditors would also have an interest in determination of whether the redress (after restoration, formal offer and acceptance) would be covered by paragraph 99 charge.

Comment

Questions remain open as to whether, following restoration of the company and offer and acceptance of the redress, (i) the court would order that a redress payment would be caught by the paragraph 99 charge, and (ii) the result would have been different if, during the administration, a claim had been issued or threatened by the administrators for misselling.

Walker and another v National Westminster Bank Plc and another [2016] EWHC 315 (Ch)