Administration appointment upheld despite service defects (Perhar v Synergy)
Restructuring & Insolvency analysis: The High Court dismissed an application to invalidate (or bring to an end) an administration appointment by a trade finance provider under a qualifying floating charge. ICC Judge Prentis held that, for paragraph 16 of Schedule B1 to the Insolvency Act 1986 (IA 1986), the relevant question is whether the chargeholder’s contractual right to enforce has arisen, not whether the chargeholder has taken procedurally flawless enforcement steps. Applying SAW (SW) 2010 Ltd v Wilson [2017] EWCA Civ 1001, the floating charge was enforceable because there were serious and ongoing contractual/trust breaches and an unpaid secured debt. The court accepted that the demand process had service imperfections under the debenture, but treated the emailed demand as effective under the accompanying facility letter, and in any event found no ‘substantial injustice’ such as would prevent cure under rule 12.64 of the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. Finally, an ‘improper motive’ challenge under IA 1986, Sch B1, para 81 failed on the evidence; and even if an improper motive had been shown, the administration would have remained in place. Written by Kevin Mulligan, senior associate at Greenberg Traurig, LLP.