Achieving the purpose of an administration—Re BW Estates; Randhawa v Turpin

Achieving the purpose of an administration—Re BW Estates; Randhawa v Turpin

Will the courts reject a challenge to the administrators’ fees and disbursements where an administration could achieve one of the purposes of administration? Stefan Ramel of Guildhall Chambers comments on a ruling that he says will be a comfort to administrators.

Original news

Re BW Estates Ltd; Randhawa and another v Turpin and another [2015] EWHC 517 (Ch), [2015] All ER (D) 27 (Mar)

The applicant creditors of a company in administration applied for orders that:

  • the remuneration of the respondent administrators was excessive and should be either disallowed entirely or reduced; and
  • that the administrators should pay the costs of the application personally and not as an expense of the administration

The Companies Court rejected the contention that the administrators, appointed under Insolvency Act 1986 (IA 1986), could not or should not have made the statement as to the statutory purpose, as required under IA 1986, Sch B1, para 29(3)(b), which had led to their appointment. Further, the argument that they should not be entitled to any remuneration at all for their services was rejected. Once the decision to appoint administrators had been made, the responsibility on the prospective administrator in considering whether the statement as to the statutory purpose could be made was to look ahead at what would or might happen during the administration if he was appointed, and not behind at the motives which might have led the directors to choose to make the appointment.

What was the background to the case?

The wider background to this case arises from a dispute between the Randhawas and Mr Robert Williams which resulted in a substantial judgment in favour of the Randhawas. One of Mr Williams’ assets, over which the Randhawas obtained a charging order, was a shareholding in the company. The company in question was a property investment company which owned several properties. The properties were secured in

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.