Q&As

What does ‘reasonably practicable’ mean in paragraph 3(3) of Schedule B1 to the Insolvency Act 1986?

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Produced in partnership with Ian Defty of Begbies Traynor
Published on LexisPSL on 15/10/2019

The following Restructuring & Insolvency Q&A produced in partnership with Ian Defty of Begbies Traynor provides comprehensive and up to date legal information covering:

  • What does ‘reasonably practicable’ mean in paragraph 3(3) of Schedule B1 to the Insolvency Act 1986?

What does ‘reasonably practicable’ mean in paragraph 3(3) of Schedule B1 to the Insolvency Act 1986?

The purpose of administration is set out in paragraph 3 of Schedule B1 to the Insolvency Act 1986 (IA 1986):

‘(1) The administrator of a company must perform his functions with the objective of—

(a) rescuing the company as a going concern, or

(b) 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

(c) realising property in order to make a distribution to one or more secured or preferential creditors.’

IA 1986, Sch B1, para 3(3) states that the administrator must perform their functions with the objective specified in IA 1986, Sch B1, para 3(1)(a) above, unless they thinks either—

‘(a) that it is not reasonably practicable to achieve that objective, or

(b) that the objective specified in sub-paragraph (1)(b) would achieve a better result for the company's creditors as a whole.’

The objectives in IA 1986, Sch B1, para 3(1) are hierarchical. Therefore, the prospect of rescuing the company (as distinct from the business) is only the starting point. Only if the administrator decides that this is not reasonably practicable can they move on to the second (b) and then third (c) of the three objectives.

IA 1986, Sch B1 was introduced by the Enterprise Act 2002. When the

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