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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

Guildhall Chambers , 03 MAR 2015

Re Eiffel Steel Works Ltd, Unreported

Re Eiffel Steel Works Ltd, Unreported
(Judge Andrew Hochhauser Q.C., 15 January 2015)

Although a failure to give notice to the members of a company of the proposed appointment of administrators was arguably a defect in the procedure, the administrators’ appointment was not a nullity and was declared to be valid as there had been no ascertainable prejudice.

The applicant joint administrators of an insolvent company applied for a declaration that their appointment was valid. The company's directors had unanimously resolved to appoint the administrators and the company's parent company had been aware of and agreed to the proposed appointment. The issue was whether the appointment was invalid because notice of intention to appoint should have been given to the “company” under the Insolvency Act 1986, Sch.B1, Pt 4 para.26(2) and para.26(3), and the Insolvency Rules 1986 Pt 2 (4), r 2.20 to 2.22. The administrators argued that, even if notice was required, the failure to give it had not rendered their appointment a nullity.

The judge granted the application. While a notice should have been served, the failure to do so did not result in the administrators’ appointment being a nullity (applying Re Ceart Risk Services Ltd [2012] EWHC 1178 (Ch), [2013] Bus. L.R. 116, Re Assured Logistics Solutions Ltd [2011] EWHC 3029 (Ch), [2012] B.C.C. 541 and Re BXL Services [2012] EWHC 1877 (Ch), [2012] B.C.C. 657). The company owners had been aware of and fully approved of the decision to appoint, and there had been no ascertainable prejudice of any kind. There was no substantial, irremediable injustice, which under r 7.55 of the Rules would cause the insolvency proceedings to be invalidated by any formal defect or irregularity.
Guildhall Chambers
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