Speciality Steel UK Limited v FGI Worldwide LLC & Ors
[2023] EWHC 606 (Ch)
Hartley Pensions Limited (in administration) v Wilton UK (Group) Limited
7 July 2023
[2023] EWHC 1700 (Ch)
High Court
A company that provides vital services to a pension provider faced a winding-up petition and a request for administration. The judge decided that keeping the company running under administration was better for everyone involved, even though there were questions about how the administrators were initially appointed. The judge prioritized keeping the pension provider running smoothly.
Key Facts
- •Hartley Pensions Limited (in administration) applied for an administration order for Wilton UK (Group) Limited.
- •A prior out-of-court appointment of administrators was questionable.
- •Wilton UK (Group) Limited provided essential services to Hartley Pensions, impacting 16,646 clients.
- •The Financial Conduct Authority (FCA) urged minimizing the impact on Hartley's customers.
- •A winding-up petition was also presented, with disputed creditor claims.
- •A settlement was reached between the Petitioners (winding-up petition) and the Applicant (administration order application).
- •The validity of the appointment of administrators on April 3, 2023, was challenged.
- •The appointment was based on a floating charge whose validity was questionable under section 245 of the Insolvency Act 1986.
- •Numerous creditors' claims were disputed, making it hard to ascertain the overall creditor position.
Legal Principles
An administration order cannot be made by consent; the court must be satisfied that there is jurisdiction to make the order and that it is appropriate to do so.
Insolvency Act 1986
A winding-up petition is a class remedy; an agreement between the company and a petitioner doesn't necessarily prevent it from proceeding.
Insolvency Act 1986
An administrator may not be appointed while a floating charge on which the appointment relies is not enforceable.
Insolvency Act 1986
A floating charge created at a relevant time is invalid except to the extent of the consideration given to the company at the same time as, or after, the creation of the charge (section 245 IA 1986).
Insolvency Act 1986
The applicant for an administration order must have standing, which doesn't require the debt to be undisputed (contrast winding-up petitions).
Case Law
Evidence presented to the court for an administration order must be reliable, accurate, true, and give a clear account of potentially relevant facts and circumstances.
Case Law
The availability of section 127 IA 1986 (avoiding dispositions) in liquidation can be a weighty factor, but not always decisive.
Case Law
Outcomes
Administration order granted with retrospective effect.
The court found it was reasonably likely that administration would achieve a better result for creditors than liquidation, considering the dependence of Hartley Pensions on Wilton, potential contingent liabilities, and the need to avoid disruption.
The court did not definitively rule on the validity of the initial administrator appointment.
While strong grounds existed to deem the appointment invalid due to the questionable floating charge, the court chose a 'worst-case scenario' approach, granting relief assuming invalidity and addressing the administration application directly.