Johnson Machine and Tool Co Ltd & Anor, Re [2010] EWHC 582 (Ch) (18 March 2010)

Johnson Machine and Tool Co Ltd & Anor, Re [2010] EWHC 582 (Ch) (18 March 2010)

Pre-appointment costs should not be treated as administration expenses unless it is clearly demonstrated that the balance of advantage lies with the creditors rather than management; in these cases, the applicants failed to justify such treatment.

Citation
[2010] EWHC 582 (Ch)
Parties
Company: Johnson Machine and Tool Co. Limited; Company: Empire Surfacing Limited
Jurisdiction
England and Wales
Judgment Date
18 March 2010
Procedural Posture
Administration Application / Post Hearing Judgment
Outcome
applications for pre-appointment costs to be treated as administration expenses refused
Legal Topics
Administration Expenses, Pre Pack Administration, Pre Appointment Costs
Insolvency Company Law Administration Expenses Pre Pack Administration Pre Appointment Costs

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Parties

Johnson Machine and Tool Co. Limited

Company

Empire Surfacing Limited

Company

Procedural Posture

Administration Application / Post Hearing Judgment

Legal Issues

  1. 1 Whether pre-appointment costs of insolvency practitioners in pre-pack administrations should be treated as administration expenses

Ratio Decidendi

Pre-appointment costs should not be treated as administration expenses unless it is clearly demonstrated that the balance of advantage lies with the creditors rather than management; in these cases, the applicants failed to justify such treatment.

Court Disposition

applications for pre-appointment costs to be treated as administration expenses refused

Orders

  • administration orders made
  • pre-appointment costs not allowed as administration expenses