On 29 January 2020 – following a wave of recent case law which could be described, at best, as inconsistent and, at worst, as chaotic – Sir Geoffrey Vos, the Chancellor of the High Court, finally issued a guidance note documenting the procedure to be used by courts going forward when they receive out-of-hours administrator appointments through the e-filing system.
Due to the ambiguity of the legislation in this area, the last few months have seen conflicting case law concerning (a) the validity of a notice of appointment of an administrator (“NOA”) e-filed outside the relevant court’s opening hours and (b) if such an NOA is valid, the deemed time of filing and subsequent time of appointment.
While the new guidance confirms that these issues will ultimately be addressed by way of amendment to the Insolvency (England and Wales) Rules 2016, the timescale for such an amendment has not yet been confirmed. In the meantime, the guidance confirms that the following process has been put in place:
- An NOA that has been e-filed outside court hours (by a company, its directors or a qualifying floating charge holder) will be referred by the court clerks to a specified High Court Judge at the first possible opportunity;
- The High Court Judge will determine the validity of the NOA and, if appropriate, the time at which the appointment takes place;
- The High Court Judge’s determination will be made on paper or following a short hearing, for which written or oral submissions may be requested.
It is important to note that this guidance and new process applies to NOAs only – consequently, the position in relation to notices of intention to appoint an administrator remains unclear.
Although a helpful clarification as to the approach to be taken by the courts, this new interim process is likely to raise as many questions as it answers. The following are key issues to bear in mind:
- While a prospective administrator no longer needs actively to apply for validation from the court in respect of a potentially defective out-of-hours NOA, there is now the possibility of having to attend an unexpected hearing;
- No guidance has been provided about:
- what factors the Judge will consider when making a decision;
- how long such a decision may take;
- when a hearing will be deemed necessary; and
- what submissions may be required;
- It is unclear whether court staff will accept applications for appointments as being made within court hours if uploaded and submitted via e-filing within court hours, even if a delay results in the courts not receiving them until after this time;
- No clarification has been given as to how or whether a consistent approach will be taken by the High Court Judges in making these decisions or if, capacity permitting, a single High Court Judge will be able to deal with all NOAs referred in this way to ensure uniformity and certainty for users.
Although this is a clear step forward in reaching some long-term consistency and certainty on this issue, practitioners are now having to deal with an interim appointment process that raises further questions. It is, however, undoubtedly clear that NOAs should be e-filed within court hours if prospective administrators want to be confident (a) that their appointment is valid and (b) as to the time at which such an appointment has taken place.
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