E-FILING, ADMINISTRATION – NOTICE OF APPOINTMENT
… a different case, a different decision.
EXECUTIVE SUMMARY
There are now a number of conflicting decisions concerning the ability of directors/companies to appoint outside of court hours, and another decisions on a QFCH’s ability to appoint outside of court hours using the e-filing process.
Whilst office-holders can take comfort that the appointments were all held to be effective (but for different reasons and becoming effective at different stages in the process), there remains uncertainty. Purported administrators should take advice if they have any concerns.
INTRODUCTION
Following the release of R3’s Technical Alert on the decision of ICC Judge Burton in the matter of S.J. Henderson & Company Limited (in administration) and Triumph Furniture Limited (in administration) on 8 November 2019, it came to our attention that HHJ Hodge QC had handed down a decision in Keyworker Homes (North West) Limited (‘KWHL’) in which he decided that directors CAN appoint out of hours via e-filing, and the appointment would take effect at the time and date of filing (subject to subsequent acceptance).
The judgment for KWHL is now available here.
With regard to a QFCH’s ability to appoint outside of court hours using the e-filing process, this was considered in the matter of All Star Leisure (Group) Limited (‘ASL’). HHJ Cooke clarified the consequences of a notice of appointment of administrators by a QFCH being filed outside of court opening hours using the e-filing process.
The judgment for ASL is now available here.
KEY ASPECTS OF THE KWHL JUDGMENT
The KWHL application raised the question as to the correct meaning of paragraph 8.1 of the Insolvency Practice Direction and whether it should or does preclude the company or its directors from filing notices of appointment of administrators outside the court’s usual counter opening hours by using the courts 24 hours E-filing system.
HHJ Hodge QC decided that Directors or the company CAN appoint out of hours via e-filing, taking effect at the time and date of filing (subject to subsequent acceptance). HHJ Hodge QC commented “I am entirely satisfied that the notice of appointment that was filed electronically at 18.00 on 24 October took effect when it was filed at court at that time.”
To support his decision, HHJ Hodge QC appeared to rely heavily on Rule 1.46 of the Insolvency Rules 2016 to support his decision –
(1) A document may not be delivered to a court by electronic means unless this is expressly permitted by the CPR, a Practice Direction, or these Rules.
(2) A document delivered by electronic means is to be treated as delivered to the court at the time it is recorded by the court as having been received or otherwise as the CPR, a Practice Direction or these Rules provide.
At paragraph 69 of the judgment, HHJ Hodge QC commented “Insolvency Rule 1.46 itself contemplates that a document may be delivered to a court by electronic means if expressly permitted by a practice direction. In my judgment, that is what paragraph 8.1 expressly permits in relation to the appointment of administrators otherwise than by a qualifying floating charge holder.”
Another key aspect to note is in relation to the calculation of the 10-day business period window to file a Notice of Appointment to appoint an administrator by company or directors (where a notice of intention to appoint has been given). He determined that the 10-day business period window does NOT include the day of filing.
Notice of intention to appoint an administrator by company or directors (‘NOI’)
He also decided that Notices of Intention to Appoint Administrators can be filed at any time via e-filing and takes effect at the time it is filed.
Notice of Appointment to appoint an administrator by company or directors (where a notice of intention to appoint has been given) (‘NOA’)
For the purposes of the computation of the period of 10 business days pursuant to paragraph 28(2) of Schedule B1 of the Insolvency Act 1986, his judgment was that the first business day will be the business day after the date on which the Notice of Intention to Appoint was filed. A ‘clear days’ calculation.
KEY ASPECTS OF THE ASL JUDGMENT
Despite the best efforts of the solicitor, the notice of appointment was filed 18 minutes after the published court opening hours had ended. The appointment then led to the sale of the business of the company in administration before the court opened the following morning.
The judge determined that if a notice of appointment was filed at court via e-filing after the court’s published opening hours, on the face of it that appointment did not take effect until the court next opened, which was consistent with the thoughts of ICC Judge Burton and Mr Justice Marcus Smith in Skeggs Beef Ltd (in administration). However, the judge further determined that the court may still determine that it took effect from a different time (in this case, the time and date it was filed with the court) as it was a formal defect which was capable of remedy under r12.64 IR16, provided that there is no substantial injustice caused by doing so.
CONCLUSION
Notwithstanding the hopes at the end of the KWHL judgment, it still adds to the confusion for Insolvency Practitioners. Again, as this was an unchallenged first instance decision, Insolvency Practitioners should appreciate that other first instance decisions could contradict this. A judgment from a higher court, or clarification in the CPR or Insolvency Rules is still needed. It is certainly on the Insolvency Service’s radar.
KWHL – Timeline of events and judgment
Download pdf timeline below.