Re Eiffel Steel Works Ltd, Unreported
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
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  EWHC 1178 (Ch),  Bus. L.R. 116, Re Assured Logistics Solutions Ltd  EWHC 3029 (Ch),  B.C.C. 541 and Re BXL Services  EWHC 1877 (Ch),  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.
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