Out-of-court appointment of Administrators—another e-filing decision (Re Keyworker Homes (North West) Limited)

Out-of-court appointment of Administrators—another e-filing decision (Re Keyworker Homes (North West) Limited)

The court held that a notice of appointment of administrators (NoA) could be filed at court by directors of a company by e-filing outside of court hours and that such filing took effect from the time at which it was filed by the directors (and not at the time at which the court office subsequently opened and processed the documents). Given the various different and inconsistent analyses applied in the earlier case law to this question, this decision goes further than any before in making an unequivocal finding as to an entitlement of directors to appoint administrators in this manner—a decision which puts directors in a superior position to qualifying floating charge holders making out-of-hours, out-of-court appointments. Written by Carly Sandbach, barrister, at Exchange Chambers.

Re Keyworker Homes (North West) Ltd [2019] EWHC 3499 (Ch)

What are the practical implications of this case?

The decision is of enormous significance to insolvency practitioners, those who appoint them and their advisors. In finding an entitlement for directors to appoint administrators by e-filing outside of court hours—and that such appointment takes effect at the time of the filing (and not at the time at which the court office subsequently opened and processed the documents)—the decision goes further than any of the earlier decisions on this question and disagreed with the analyses applied in Re Skeggs Beef Limited [2019] EWHC 2607 (Ch) and Re SJ Henderson and Co Ltd [2019] EWHC 2742 (Ch) in this regard. The effect of the decision is to place directors in a superior position to qualifying floating charge holders making out of hours, out of court appointments, who remain subject to the regime set out in Insolvency (England and Wales) Rules 2016, SI 2016/1024, rules 3.20 to 3.22.

The court further adopted an expansive interpretation to the calculation of ‘ten business days’, finding that in calculating the period of ’ten business days’ referred to in paragraph 28(2) of Schedule B1 to the Insolvency Act 1986 (IA 1986), the day upon which the notice of intention to appoint administrators (NoI) was filed, was to be disregarded such that ‘day one’ of the period of ten business days was the working day following the filing of the NoI. This is notwithstanding the wording of IA 1986, Sch B1, para 28(2) which states ‘…after the period of ten business days beginning with the date on which the notice of intention to appoint is filed’. The result is to afford appointors a further day by which to file their NoA, than the way in which that period had commonly (though not universally) previously been calculated.

What was the background?

On 11 October 2019 at 16:29 the directors of the company electronically filed at court a NoI. On 24 October 2019 at 18:00 the directors of the company electronically filed at court a NoA. An e-filing approval notification confirmed the filing had been ‘accepted by the clerk on 24 October 2019 at 06:00 PM’. The NoA was received back on 25 October 2019 having been endorsed as follows: ‘This notice was filed on 25 October 2019 at 10:00AM’.

In light of the recent decisions of Re HMV Ecommerce Ltd [2019] EWHC 903 (Ch), Re Skeggs Beef Limited [2019] EWHC 2607 (Ch) and Re SJ Henderson and Co Ltd [2019] EWHC 2742 (Ch) concerning the validity of e-filing of NoAs out of hours; and separately the provisions of IA 1986, Sch B1, para 28(2) (an appointment of an administrator may not be made by the directors under IA 1986, Sch B1, para 22 after the period of ten business days beginning with the date on which the NoA is filed under IA 1986, Sch B1, para 27(1)) the joint administrators were concerned as to the validity of their appointment. An application was issued seeking declarations as to the validity of their appointment, alternatively relief in respect of any defect in the same.

What did the court decide?

In view of the various differing analyses provided by the earlier case law, the court was required to determine:

  • whether the NoI had been validly filed and if so, at what date/time the filing was to be deemed to have been made?  
  • whether the NoA had been validly filed and if so, at what date/time the filing was to be deemed to have been made? 
  • was to be calculated, and as such whether there had been compliance in this case IA 1986, Sch B1, para 28(2) how the period of ‘ten business days’ referred to in

The court held:

  • a NoI may be validly filed by electronic filing outside of court office hours. The NoI was therefore validly filed on 11 October 2019  
  • a NoA may be validly filed by directors of a company using electronic filing outside of court office hours, and such filing takes effect at the time the document is filed by the relevant party. The NoA was therefore validly filed on 24 October 2019 at 18:00, and the endorsement on the NoA would be amended to reflect this  
  • was 25 October 2019IA 1986, Sch B1, para 28(2), the day on which the NoI was filed was to be disregarded such that ‘day one’ of the period of ten business days was the working day following the filing of the NoI. Accordingly, the NoI having been filed on 11 October 2019, the latest date by which a NoA could be validly filed pursuant to IA 1986, Sch B1, para 28(2)that in calculating the period of ’ten business days’ referred to in

Carly Sandbach is a barrister at Exchange Chambers. If you have any questions about membership of LexisPSL’s Case Analysis Expert Panels, please contact caseanalysis@lexisnexis.co.uk.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

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About the author:

Zahra started working as a paralegal at LexisNexis in the Lexis®PSL Banking & Finance and Restructuring & Insolvency teams in April 2019 and moved to the Corporate team in June 2020, where she currently works as a Market Tracker Analyst. Zahra graduated with 2.1 honours in BA French and Spanish and completed the GDL at BPP University. She has undertaken voluntary work for law firms in London, Argentina and Colombia.