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E-filing and the appointment of Administrators

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The introduction of e-filing across the Business and Property Courts in England and Wales has made it possible to file a Notice of Appointment of an Administrator at any time, day or night. This has caused some confusion as to whether a Notice of Appointment filed outside of the normal Court opening hours (without following the out of hours procedure) is valid and, if so, when it takes effect.

Two recent high court decisions have dealt with the point, albeit coming to slightly different conclusions.

The first case concerned an appointment made by a qualifying floating charge holder (QFCH) filed online at 5:03pm. The second involved appointments made by the directors of two companies, filed at 6:03am and 9:29am.

Both decisions confirmed that an appointment which is e-filed outside of the Courts’ usual opening hours, and which, in the case of the QFCH, did not follow the usual out of hours court procedure set out in rule 3.20 of the Insolvency Rules 2016 (IR 2016) , would not take effect as an out of hours appointment. However, the courts had differing views on whether the appointment would be effective in any event, and if so, when it would be considered as taking effect.

In the first case, the appointment was held to be valid but defective. The Court held that the defect was curable and made an order (pursuant to rule 12.64 of the IR 2016) that the appointment should be treated as having effect as at the time it had been filed (i.e. as an out of hours appointment). Therefore, any actions taken by the administrators in that time had been valid.

In light of these decisions, and in order to make sure any appointment is effective and takes effect at the time it is filed, it is advisable for the appointment to be made within Court opening hours. If it is not, it is unclear whether an application to Court would need to be made to validate the appointment. Given the remaining uncertainty, it is highly likely that this point will be considered again in the near future and this will hopefully provide the required clarity.

One final point unofficially considered by the Court in the second case was whether a notice of intention to appoint administrators could be filed (and take effect) out of hours. The Court’s view on this was that it could and would take effect at the time the notice was filed. This seems at odds with the Court’s decision in respect of the appointments themselves and did not form part of the official judgement. In the circumstances, practitioners should be wary of relying on this and our view is that the filing of any notices of intention should also take place within the Court opening hours wherever possible.

If you have any questions about anything featured in this blog, please contact the Business Restructuring and Insolvency Team.

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