Chris Adams, 11th November, 2019
Since its introduction, the Court’s e-filing system has created a level of uncertainty for Administrator appointments using the ‘out of Court’ procedure.
Under the old system, provided that there were no other Qualifying Floating Charge Holders (‘QFCH’), a QFCH could simply file a Notice of Appointment (‘NOA’) at the Court (in person). At the time of filing, the Court would endorse the NOA with a date and time. The Administration would take effect from that exact time and date. Simple.
Now, the NOA is filed electronically using the Court’s e-filing system. As an example, if the NOA is filed at 10:35am, provided it is accepted by the Court, the Administration takes effect from 10:35am. However, this creates a level of uncertainty in itself as the Court may not notify you that the NOA has been accepted until later that day, leaving you wondering if the appointment has taken effect or not.
This also creates other issues, as of course an NOA could be filed at any time (at 1am for example) using the Court’s e-filing system. The question is then when would the Administration take effect – 1am or when the Court office opened at 10am the next day?
Two recent High Court decisions have considered, respectively, the ability of a QFCH to use the Court’s e-filing system to file an NOA out of Court hours.
Both cases found categorically that it is not possible for any party to effect an Administrator appointment out of Court hours by using the e-filing system. However, the Court had different views as to the consequence for any appointment attempted in this way: -
• In Re Skeggs Beef, Marcus Smith J held that a QFCH appointment that had been made at 5.03pm (after the court closed at 4.30pm) was valid, though defective. As there was no incurable substantial injustice the Court declared that the appointment was valid from the time it was supposedly made; however,
• In Re SJ Henderson and Re Triumph Furniture, ICC Judge Burton held that any out-of-hours appointment made using the e-filing system had no effect at all and so was not curable. However, any such filing, if accepted and endorsed by the Court during that out-of-hours period, would automatically take effect at the time the Court next opened (usually 10am).
Our view as a result of these two decisions is that until there is either an amendment to the Practice Direction on Insolvency Proceedings or an appellate decision, any Administrator appointment using the out of Court route should be done between Court hours - 10am to 4.30pm on a weekday. This will avoid any arguments of defective NOAs, or the need for any subsequent Court application.
Need advice? We can help you
Call Chris Adams on 01482 324252 for a no-obligation chat.