Key Point

An administrator appointed under a qualifying floating charge can "adopt" an existing winding up petition for the purposes of liquidating the company where the benefit to the creditors of the insolvent estate is manifest on the facts.

Facts

An administrator was appointed by a qualifying floating chargeholder. Under paragraph 40(1)(b) of Schedule B1 any extant winding up petition is suspended for the period of the administration but capable of being revived. The administrator later sought orders that (i) his administration cease (ii) that various applications by creditors for the withdrawal of an extant petition for winding up the company be dismissed and (iii) that the company be wound up pursuant to paragraph 79(4) of Schedule B1 of the Insolvency Act 1986. The administrator wanted the winding up order made upon the petition because the doctrine of relation back would mean the liquidation commenced on the date that petition was presented. This was considered crucial in order to allow the liquidator to challenge certain payments made by the company after the presentation of the petition under section 127 of the Act. The petitioning creditor successfully argued at first instance that the administrator could not take over the extant petition because paragraphs 21 and 60 of Schedule B1 allowed him to present his own petition on seeking the termination of the administration and those provisions formed a complete code denying the administrator the right to take over a petition extant at the time of his appointment. The administrator appealed.

Decision

The Court held there was a good reason for the administrator to seek a winding up order based upon the original petition. The purely procedural arguments put forward by the creditor at first instance would allow it to benefit from payments made to it which should be the subject of proper investigation by a liquidator. The administrator had sufficient interest in the extant petition and a winding up order could be made on it at his request.

Comment

The Court went out of its way to assist the administrator and stated that to the extent there were any procedural defects relating to the winding up petition it would exercise its discretion to waive them if necessary to make the winding up order.

Harlow v Creative Staging Limited