Stephen & Anor QMD Hotels Ltd [2010] ScotCS CSOH_168 (16 December 2010)

Stephen & Anor QMD Hotels Ltd [2010] ScotCS CSOH_168 (16 December 2010)

It would be disproportionate to incur costs of £5,000 for a distribution yielding only £699 to unsecured creditors, but the solution is not to disapply s.176A(2); rather, the administrators should take a proportionate approach, limiting costs to £570, enabling a small but meaningful dividend to unsecured creditors.

Citation
[2010] ScotCS CSOH_168
Parties
Joint Administrator (noter): James Bernard Stephen; Joint Administrator (noter): David John Hill; Company in Administration: QMD Hotels Ltd; Floating Charge Holder: Royal Bank of Scotland (RBS)
Jurisdiction
Scotland
Judgment Date
16 December 2010
Procedural Posture
Application Under Insolvency Act 1986 S.176 A(5) / Hearing of Application for Order Disapplying S.176 A(2)
Outcome
Application to disapply s.176A(2) refused; direction given to make proportionate distribution to unsecured creditors.
Legal Topics
Administration of Insolvent Companies, Distribution to Unsecured Creditors, Prescribed Part, Costs of Distribution
Insolvency Law Administration of Insolvent Companies Distribution to Unsecured Creditors Prescribed Part Costs of Distribution

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Parties

James Bernard Stephen

Joint Administrator (noter)

David John Hill

Joint Administrator (noter)

QMD Hotels Ltd

Company in Administration

Royal Bank of Scotland (RBS)

Floating Charge Holder

Procedural Posture

Application Under Insolvency Act 1986 S.176 A(5) / Hearing of Application for Order Disapplying S.176 A(2)

Legal Issues

  1. 1 Whether to disapply s.176A(2) of the Insolvency Act 1986 requiring a prescribed part to be made available for unsecured creditors on grounds of disproportionate cost

Ratio Decidendi

It would be disproportionate to incur costs of £5,000 for a distribution yielding only £699 to unsecured creditors, but the solution is not to disapply s.176A(2); rather, the administrators should take a proportionate approach, limiting costs to £570, enabling a small but meaningful dividend to unsecured creditors.

Court Disposition

Application to disapply s.176A(2) refused; direction given to make proportionate distribution to unsecured creditors.

Orders

  • Joint administrators to make payments to unsecured creditors as per schedule, limiting costs to £570 and distributing a dividend of approximately 1.8p in the pound.