Earlier last month, the UK High Court held that administrators appointed under the Investment Bank Special Administration Regulations 2011 (UK) are not officers analogous to liquidators.

The ruling arose from an application for directions made by investment bank administrators (IBAs) on the issue of whether their appointment was analogous to the appointment of a liquidator. Had the Court held in the affirmative, their appointment would have constituted an event of default by the company in administration under the terms of a global master repurchase agreement.

The respondent (Inc) submitted that the appointment constituted an event of default. Inc accepted that while an administrator may occasionally perform the same role as a liquidator in realising the assets of the company, the administrator may also "rescue" the company, preventing liquidation. Despite the distinction between the two kinds of officers, Inc asserted that the appointment of an IBA should be treated as analogous to the appointment of a liquidator because only very rarely, if at all, would the rescue of an investment bank which had gone into special administration be possible.

The Court rejected Inc's argument. Such an approach would require consideration of the probability of the rescue of a company, importing judgments which undermine the maximum level of certainty required in the definition of "acts of insolvency", and the occurrence of events of default. Parties cannot be expected to investigate whether the purpose of an administration might include a rescue of the company in administration.

See Court decision here.