Key points

  • A practical approach was adopted by the court in respect of deadlines for submitting administration expense claims that were otherwise holding up the making of distributions to unsecured creditors.
  • In the absence of a suitable statutory mechanism, the court allowed for a cut-off date by which expense claims must be submitted.

The administrators of 18 of the Nortel companies applied to court for directions on how to deal with potential claims for administration expenses.

The claims had not yet been formally submitted but the possibility that they might be and, if accepted, would be payable in priority to any distribution to unsecured creditors prevented the administrators from progressing the final stages of the administrations.

The mechanisms in Chapter 10 Part 2 of the Insolvency Rules 1986 (which applied, as the applications were made two days before the 2016 Rules came into force) apply to unsecured debts only, and do not extend to administration expenses.

Decision

The court directed the administrators to write to the potential claimants requiring them to formalise their claims by a specific date. Additionally, the administrators were to place advertisements in national newspapers with the same information.

The letters and advertisements were to make it clear that after the expiry of the deadline the administrators were free to make distributions to the unsecured creditors.

A claim for an administration expense received after the deadline was not extinguished, but would only be payable to the extent there were any funds that were not otherwise allocated for distribution.