Blights Builders Ltd, Re [2006] EWHC 3549 (Ch) (02 October 2006)

Blights Builders Ltd, Re [2006] EWHC 3549 (Ch) (02 October 2006)

The appointment of joint administrators by the company's members was invalid because a winding up petition had already been presented and not disposed of, depriving the company of power to appoint administrators under paragraph 22 of Schedule B1. The invalidity could not be remedied under Insolvency Rule 7.55. However, the acts of the administrators are to be treated as valid under paragraph 104 of Schedule B1, and an administration order is appropriate given the company's insolvency and the likelihood of a better outcome for creditors.

Citation
[2006] EWHC 3549 (Ch)
Parties
Petitioner/creditor: Jewson Limited; Respondent/company: Blights Builders Limited; Proposed Joint Administrator: Mr O'Sullivan; Proposed Joint Administrator: Mr Tailby; Shareholder/executors: Mr Blight's executors
Jurisdiction
England and Wales
Judgment Date
02 October 2006
Procedural Posture
Insolvency (administration and Winding Up) / Hearing of Applications Regarding Validity of Administrator Appointment and for Administration Order
Outcome
Appointment of Mr O'Sullivan and Mr Tailby as administrators declared invalid; acts as administrators declared valid; indemnity granted for actions taken; administration order made; winding up petition dismissed.
Legal Topics
Appointment of Administrators, Winding Up Petitions, Validity of Insolvency Proceedings, Administration Orders
Insolvency Company Law Appointment of Administrators Winding Up Petitions Validity of Insolvency Proceedings Administration Orders

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Parties

Jewson Limited

Petitioner/creditor

Blights Builders Limited

Respondent/company

Mr O'Sullivan

Proposed Joint Administrator

Mr Tailby

Proposed Joint Administrator

Mr Blight's executors

Shareholder/executors

Procedural Posture

Insolvency (administration and Winding Up) / Hearing of Applications Regarding Validity of Administrator Appointment and for Administration Order

Legal Issues

  1. 1 Whether the appointment of joint administrators was valid in light of an undisposed winding up petition
  2. 2 Whether the invalidity of the appointment could be remedied under Insolvency Rule 7.55
  3. 3 Whether a creditor may apply for an administration order in place of a winding up order

Ratio Decidendi

The appointment of joint administrators by the company's members was invalid because a winding up petition had already been presented and not disposed of, depriving the company of power to appoint administrators under paragraph 22 of Schedule B1. The invalidity could not be remedied under Insolvency Rule 7.55. However, the acts of the administrators are to be treated as valid under paragraph 104 of Schedule B1, and an administration order is appropriate given the company's insolvency and the likelihood of a better outcome for creditors.

Court Disposition

Appointment of Mr O'Sullivan and Mr Tailby as administrators declared invalid; acts as administrators declared valid; indemnity granted for actions taken; administration order made; winding up petition dismissed.

Orders

  • Declaration that appointment of Mr O'Sullivan and Mr Tailby as joint administrators was invalid.
  • Indemnity in respect of actions taken by them whilst acting as administrators under the invalid appointment.