Beyond the scope—can an administrator still be remunerated?

Beyond the scope—can an administrator still be remunerated?

Restructuring & Insolvency analysis: What does the recent Brilliant Independent Media Specialists case tell us about whether an administrator can have their remuneration fixed for work undertaken contrary to the wishes of a creditors’ committee and outside the scope of the proposals approved by creditors.

Original news

Re Brilliant Independent Media Specialists Ltd [2014] EWHC B11 (Ch), [2014] All ER (D) 111 (Oct)

Mr Registrar Jones sitting in the Companies Court was faced with the issue of whether the court could fix administrators’ remuneration which had not been approved by the creditors’ committee. After modification, the proposals provided, among other things, for the company to move from administration to creditors’ voluntary liquidation within six months of the commencement of the administration, and for investigative work to be undertaken by the liquidators (who would not be the administrators). The creditors’ committee challenged the administrators’ right to recover remuneration in circumstances in which it was claimed that the administrators acted beyond the scope of the proposals and the wishes of the creditors’ committee.

The Registrar held that, notwithstanding the proposals and the wishes of the creditors’ committee, the administrators were entitled to be remunerated for some of the work undertaken by them. Having made that decision, the Registrar then had to consider the amount of remuneration to be fixed.

What were the facts of the case?

Brilliant Independent Media Specialists Ltd (BIMS), together with other members of its group, entered into administration on 1 December 2011. BIMS’ business and assets were sold for £1 in a pre-pack sale, with the purchaser undertaking liabilities in excess of £2.1m. This was intended not only to preserve the business and maintain employment, but also to improve the prospects of collecting BIMS’ books debts, which were considered to be £6.6m. Other assets available for realisation post-sale of BIMS’ business were cash, directors’ loans and licence fees. The administrators anticipated that the secured and preferential creditors would be paid in full, and a dividend paid to the

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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.