A recent decision passed down in the Chancery Division of the High Court (Companies Court) in the UK, has emphasized that evidence presented in support of an application for administration must be accurate, true and reliable, and that a nominee administrator must form an independent and competent view on the evidence as to the prospects of the purpose of administration being achieved.

In Re Integral Ltd [2013] EWHC 164 (Ch), there were two matters before the Court: a winding up petition presented by Inestco Plc, in respect of an unpaid costs order against Integral Limited (the Company); and an application by the sole director of the Company for an administration order in respect of the Company. The judge ultimately dismissed the Company's application for an administration order, and ordered that the company be wound up. One of the factors that led to the decision to wind up the company was that the evidence presented to the Court in support of an order for administration was incomplete and in some cases inconsistent. Further, the evidence given by the nominee administrators was unreliable, in that the intended nominees had unquestionably accepted what the Company's sole director had told them, and had not undertaken any independent investigation.

The Court also outlined a number of factors that would be relevant to the court’s discretion when deciding whether to make an administration order rather than a winding-up order, including the existence of potential claims against directors, the need for the appointment of an independent office-holder, and the conduct of the insolvent company in its affairs and in the proceedings.

See court decision here.