Clarification on when the court should lift the administration moratorium in respect of litigation.
A company issued proceedings in the Queen’s Bench Division alleging that administrators were personally liable in respect of a purported contract. The Master held that the companies in administration be joined to those proceedings, subject to permission being granted, and the matter was transferred to the Companies Court. The administrators took a largely neutral stance on the application to lift the moratorium, but denied that any contract was entered into.
The Registrar set out the principles of when permission should be granted and found that the purpose of the administration had been achieved. On that basis the Registrar held that it was not necessary to carry out a balancing exercise between the applicant and other creditors and in circumstances where there is a surplus and the limited numbers of other creditors did not oppose the application, these were “powerful and compelling reasons to grant permission”.
Even if a balancing exercise was required, the Registrar saw no prejudice to other creditors and found, on the facts, that the claimant had a reasonable prospect of success. The Registrar therefore granted permission on certain conditions.