- Court refuses to direct meeting that would serve no purpose (Re Fortuna Fix Ltd)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: The court had to determine the fate of Fortuna Fix Ltd (FFL). FFL’s administrators made two applications for directions, in circumstances where a minority shareholder (Salamander) had supported the appointment of the current administrators. The majority creditor Genesis Technologies Ltd (GTL) had rejected the administrators’ proposals. The outcome GTL sought was for FFL to be placed into liquidation or, alternatively, a meeting to determine the appointment of new administrators. After deciding that the court had jurisdiction to determine the dispute, Insolvency and Companies Court (ICC) Judge Jones held there was insufficient evidence of a real prospect of the purpose of the administration being achieved, either by the current or prospective administrators. The result was that the current administrators became functus officio. Directions were consequently given for a hearing to determine whether to make a winding-up order instead. The case illustrates two key principles. First, the court remains the final arbiter, notwithstanding the substantial delegation within the legislative framework to the judgement of insolvency practitioners, which is responsive to the democratic rights of creditors. Second, the centre of gravity in the framework lies in liquidation. Any exception to it, such as administration, requires the fulfilment of certain criteria. Written by Samuel Parsons, barrister, at Guildhall Chambers, Bristol.
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