What should administrators consider before seeking relief?

What should administrators consider before seeking relief?

The court's decision in the recently decided case of Re Business Environment Fleet Street Ltd (In Administration) [2014] EWHC 3540 (Ch), [2014] All ER (D) 334 (Oct) highlights how important it is for administrators to properly analyse the circumstances they face to ensure the relief they seek is both appropriate in the circumstances,  and that it is a relief that the court has jurisdiction to give.

Stephen Atherton QC of 20 Essex Street, who acted for the first and second Respondents, considers the issues that arose.

Original News

The adminstrators applied under the Insolvency Act 1986, Sch B1, para 72 (IA 1986) to dispose of certain assets. The Companies Court held that it had no jurisdiction to grant the application where it was not persuaded on the balance of probabilities that a chattel leasing agreement had given possession of the assets to the company.

What were the key features of this case?

The key features of the case were:

  • the proper interpretation of the contract between the company (in administration) that owned the leasehold (and sublet serviced offices space to its tenants) and the company (within the same group of companies) whichprovided the staff, assets and ancillary services necessary for the business of providing serviced office space to operate
  • as part of the process of contractual interpretation it was also necessary to characterise/classify the nature of the obligations and the true nature of the relationship created as between the parties to the contract by reference to the terms of the contract

 What were the issues in relation to the administrator's claim?

The administrators' principal application was for an order under IA 1986, Sch B1, para 72 as against the company whichcontended that it had title to the goods. Such an order, if made, permits an administrator of a company to sell assets whichare in the possession of the company in administration under a hire-purchase

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