Q&As

The wording of paragraph 83 of Schedule B1 to the Insolvency Act 1986 suggests that an administrator only needs to think that the total amount which each creditor is likely to receive has been set aside, not that the secured creditor(s) have been or will be paid in full. Where an administrator is pursuing office-holder claims—such that any recoveries will not be caught by any security—can the administrator convert the administration to a creditors’ voluntary liquidation where secured creditors will not be paid in full or at all? The consent of secured and other creditors to extend the administration has not been forthcoming.

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Produced in partnership with Caroline Clark
Published on LexisPSL on 29/08/2019

The following Restructuring & Insolvency Q&A produced in partnership with Caroline Clark provides comprehensive and up to date legal information covering:

  • The wording of paragraph 83 of Schedule B1 to the Insolvency Act 1986 suggests that an administrator only needs to think that the total amount which each creditor is likely to receive has been set aside, not that the secured creditor(s) have been or will be paid in full. Where an administrator is pursuing office-holder claims—such that any recoveries will not be caught by any security—can the administrator convert the administration to a creditors’ voluntary liquidation where secured creditors will not be paid in full or at all? The consent of secured and other creditors to extend the administration has not been forthcoming.

The wording of paragraph 83 of Schedule B1 to the Insolvency Act 1986 suggests that an administrator only needs to think that the total amount which each creditor is likely to receive has been set aside, not that the secured creditor(s) have been or will be paid in full. Where an administrator is pursuing office-holder claims—such that any recoveries will not be caught by any security—can the administrator convert the administration to a creditors’ voluntary liquidation where secured creditors will not be paid in full or at all? The consent of secured and other creditors to extend the administration has not been forthcoming.

This Q&A suggests that a company in administration is coming up to the first anniversary of the administration. The administration will then automatically come to an end under paragraph 76(1) of Schedule B1 to the Insolvency Act 1986 (IA 1986), although it is possible for the administration to be extended by court or by the consent of creditors for up to a year under IA 1986, Sch B1, para 76(2). No mention is made in the question as to whether all assets have been realised, but the administrator is pursuing office-holder claims such as a transaction at an undervalue under IA 1986, s 238 or a preference under IA 1986, s 239. No information is available about the likelihood of a dividend

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