Q&As

Does an administrator owe a duty to shareholders? Does this differ if the creditors have been paid in full?

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Published on LexisPSL on 26/07/2018

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • Does an administrator owe a duty to shareholders? Does this differ if the creditors have been paid in full?

We have limited this Q&A to cover legal challenges other than those for misfeasance under paragraph 75 of Schedule B1 to the Insolvency Act 1986 (IA 1986).

The administrators’ role is to achieve one of the three purposes of the administration as set out in IA 1986, Sch B1, para 3 which are:

  1. rescuing the company as a going concern

  2. achieving a better result for the company's creditors as a whole than would be likely if the company were wound up (without first being in administration), or

  3. realising property in order to make a distribution to one or more secured or preferential creditors

In doing this, the administrators act for all creditors, not just the entity that appointed them.

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