When there is a dispute as to which administrator should be appointed, the wishes of the creditor, for whose benefit the administration was, takes precedence.

This was the view of the court in The Oracle (North West) Ltd v Pinnacle Services (UK) Ltd. In this case a dispute arose between the claimant, the largest unsecured creditor of the defendant, and the defendant's directors about the appointment of administrators over the company. The administrator suggested by the directors estimated that the outcome of the administration would be an overall deficiency for creditors, with unsecured creditors unlikely to recover anything other than as a result of the prescribed part. The claimant's suggested administrator estimated that there would be a surplus and a return to shareholders at the end of the administration.

The court held that the issue of which of the two administrators be appointed had to be determined having regard to the wishes of the creditors. As there was no joint strategy for the administration in place, joint administrators couldn't be appointed without the risk of there being disagreement and further applications to the court. That being the case, the creditor's preferred administrator would be appointed.

Things to consider

Don't necessarily take the proposed appointment of an administrator as being the only one available or even the most appropriate one. Where significant creditors have a clear preference and the secured and other creditors remain neutral, the courts should appoint the creditors' approved administrator as, after all, the administration is for their benefit.