In Endersby and Coote v Astrosoccer 4 U Ltd the High Court made a retrospective Administration order over a company that was subject to a winding-up petition to "cure" an invalid directors' out-of-court appointment of Administrators.
Astrosoccer 4 U (the "Company") had been ordered to pay £175,962 plus interest to a creditor. The directors of the Company had filed a Notice of Intention to appoint Administrators ("NOI") in order to prevent the creditor from enforcing their award. The Technology and Construction Court ("TCC") allowed the creditor to enforce the aware as it did not find evidence that the company was insolvent on a cash flow or balance sheet basis. It later emerged that the creditor had filed a winding up petition against the Company a few hours before the directors had filed the NOI. The TCC was not aware of the winding up petition but did comment that the NOI was likely to be defective.
The directors of the Company applied for a retrospective Administration order, to take effect from the date of the defective NOI.
The High Court made the retrospective order as it found that:
- there was sufficient evidence to show that company was insolvent on a cash flow basis and a balance sheet basis;
- Administration was likely to achieve a better return for creditors as a whole than a Liquidation. The Administrators had already commenced work and received a expressions of interest for the company's site and business. It was in the best interests of the creditors for the Administration to continue; and
- the Court had the discretion to make a retrospective order appointing Administrators as at the date of the ineffective out-of-court appointment. DJ Lesley Anderson noted that the Technology and Construction Court may not have had the "full picture" in relation to the winding up petition and NOI.
This provides further clarification from Re Business Dream Ltd (In Liquidation)  EWHC 2860 (Ch) in that administration appointments following an NOI filed after a winding up petition are not usually effective.