Administration or liquidation? (Re Baltic House Developments Ltd)

Administration or liquidation? (Re Baltic House Developments Ltd)

Samuel Parsons specialist insolvency barrister of Guildhall Chambers, whose practice encompasses domestic and cross-border personal and corporate insolvency issues, including claims brought against and on behalf of office-holders, and commercial and company claims with an insolvency element, considers the case of Re Baltic House Developments and the implications this may have on future decisions to place a company into administration or liquidation, particularly in view of the recent abolition of the ad valorem fees charged in liquidation.

Re Baltic House Developments Ltd [2018] EWHC 1525 (Ch) (17 May 2018)

What are the practical implications of this case?

Three key practical points emerge from Re Baltic House:

  • First, the decision of HHJ Eyre QC (sitting as a High Court Judge) reinforces that, notwithstanding the rising popularity of administration, liquidation remains the general ‘default’ position in insolvency in England and Wales. In particular, the case demonstrates that no matter how instinctively attractive administration might be in any particular instance, the court will still be precluded from making an administration order if an administration might result in unnecessary harm to creditors.
  • Secondly, in coming to a conclusion on whether there is a real prospect of the purpose of the administration being achieved, the court is still entitled to accept or rejected evidence, particularly if it is not corroborated or supported; a mere hope, or suggestions that the purpose of the administration will be achieved, will not be sufficient.
  • Thirdly, as a point of practice, Re Baltic House demonstrates the impact that a liquidator’s fees will have on the overall outcome of an administration order application. The Court will also not be tied to hypotheticals of what costs might be incurred, but will decide the matter on the basis of the likely outcome. In light of the general abolition of ad valorem fees in liquidations, administration orders based on paragraph 3(1)(c) of Schedule B1 to the Insolvency Act 1986 (IA 1986) may become’ less common, as liquidations

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login