6.7 Extending and ending administration

Question 1

When does an administration automatically terminate?

Answer 1

Administration terminates automatically on the 1st anniversary of date of administration, OR date of any extension period (unless further extended)

 Automatic - no reminder/warning of termination unless set up on internal systems

 Administration may be extended, but APPLICATION TO EXTENT MUST BE GRANTED BEFORE automatic termination occurs

Question 2

How can an administration be extended?

Answer 2

Court or creditor consent

Question 3

How is an administration extended by creditor consent?

Answer 3

The administration can be extended only once for a maximum of one year

NB May NOT be extended by the creditors AFTER a court extension

Consent required FROM EACH SECURED CREDITOR and either:

 at least 50% of voting unsecured creditors
Or
 where statement made under p52 Sch B1 (i.e.no distribution other than Prescribed Part) and distribution to preferential creditors, at least 50% of preferential creditors

 Extension by deemed consent procedure or QDP

Question 4

Who must receive notice of any extension?

Answer 4

Creditors
CH
Court (If extension by creditors)

Info re extension must also be included in next progress report.

Question 5

How is an administration extended by the court?

Answer 5

Administrator may apply to court

 The application may be made after an extension by creditors
 Order cannot be made after termination date
 No maximum period for extension

 More than one application allowed, including after extension with creditor consent or by the court

Question 6

What exit routes are there from administration?

Answer 6

Automatic:
* Unless extended
* Accidental?

Application to court:
* By administrator
* Purpose cannot be achieved / should not have entered administration

• By a creditor
• Improper motive for administration

Objective (a) achieved:
* Hand company back; or
* Returned to solvency or CVA / restructuring

Public interest winding up:
* Petition by SoS / FCA / PRA
* Company should be wound up in the public interest

Compulsory liquidation:
* Sch1 Power / Plus application under Para 79 to end administration
* Where investigation required but no funds for distribution

CVL:
* Exit to CVL upon REGISTRATION OF NOTICE of notice by Registrar
* Where funds available for distribution

Dissolution
* Dissolution after 3 months from filing notice with Registrar
* Where no further property to be distributed

Question 7

What are the administrator’s duties where administration comes to an automatic end?

Answer 7

Administrator must file a notice in court, with final progress report
 ASARP
 In any event, within 5 business days of 12-month period since appointment

Notice and the final report must also be given to:
 Registrar of Companies ASARP or within 5 business days
All persons who received notice of the administrator’s proposals - ASARP

(NOTE - no 5 business days for creditors)

Question 8

What are the administrator’s duties where administration comes to an end by application to court by the administrator ?

Answer 8

The court may provide for the cessation of the administrator’s appointment at any time, regardless of whether they were appointed by the court or out of court

 Application must be made where:
 The administrator thinks the purpose cannot be achieved; or
 Thinks that the company should not have entered administration; or
 The creditors have decided that they
must

The administrator’s appointment ceases at the time ordered by the court

 Notice and the final report must also be given to:
 RegistrarofCompanies ASARP
 All persons who received notice of the administrator’s proposals ASARP

Question 9

What are the administrator’s duties where administration comes to an end

A: objective achieved where court appointment?

B: objective achieved where out of court appointment?

Answer 9

A:
 Where the administration was made by court appointment, the administrator MUST APPLY TO COURT for an order ending their appointment if they think the purpose has been achieved

 Where the court makes such an order, it shall also discharge the administration order

Question 10

What are the administrator’s duties where administration comes to an end as objective achieved where out of court appointment?

Answer 10

Where the administrator was appointed out of court, they may file a notice and final progress report
 With the court
 Registrar of Companies

Appointment ceases to have effect ONCE ENDORSED BY THE COURT WITH THE DATE AND TIME OF FILING

 Notify every creditor of whose claims and address the administrator is aware within 5 BUSINESS DAYS (NB not ASARP unlike other sections)

 Alternatively publish notice in the Gazette and in any other newspaper in which they advertised their appointment, undertaking to provide a copy of the notice and report upon request

Question 11

What are the administrator’s duties where administration comes to an end by exit to compulsory winding up?

Answer 11

• Must at same time apply for the court to end the administration under para 79 Sch B1 IA86

The administrator may be appointed as liquidator by the court under s140 IA86

Question 12

What are the administrator’s duties where administration comes to an end by exit to CVL?

Answer 12

Available where secured creditors paid in full and there will be a distribution to the unsecured creditors, other than the prescribed part

 Sends notice to the Registrar of Companies, with final progress report

 Appointment CEASES ON REGISTRATION BY REGISTRAR

 Winding up commences as if a resolution was passed on the day of registration

 Administrator must ASARP send notice and final progress report to
 The court
 All creditors and every person to whom notice of appointment was delivered
 Administrator will become liquidator, unless the creditors have nominated another person

Other points:
CVL may only be used where the administrator “thinks” there will be funds available to distribute to creditors
 CVL will often be chosen in preference to compulsory liquidation where there is a possible recovery action that may result in such funds

Question 13

What are the administrator’s duties where administration comes to an end by exit to dissolution?

Answer 13

Where there are no further funds available for distributions. The administrator is required to exit to dissolution

 Sends notice to the Registrar of Companies, with final progress report

 APPOINTMENT CEASES ON REGISTRATION BY the Registrar

 Company dissolved 3 months after registration [Unless court orders otherwise]

 Administrator must ASARP send notice and final progress report to
 The court
 All creditors and every person to whom notice of appointment was delivered

Question 14

When must final progress report be delivered to relevant parties?

Answer 14

within ONE MONTH from date of ceasing to act

 EXCEPT in circumstances of the automatic end of administration or where the purposes of the administration has been achieved
 In which case, period is 5 BUSINESS DAYS

Question 15

What will be in the final progress report?

Answer 15

 Details of original approved proposals
 Any major changes to or deviations from approved proposals
 Steps taken during administration
 The outcome
 Must include an R&P for whole period of administration (compared to SoA figures)