Lehman Brothers (PTG) Ltd (in administration), Re
[2023] EWHC 3084 (Ch)
Mark Guy Boughey & Anor v Toogood International Transport and Agricultural Services Ltd (in administration)
11 June 2024
[2024] EWHC 1425 (Ch)
High Court
A company in administration needed more time. The judge decided that only creditors still owed money needed to agree to the extension. Since some creditors had been paid, their approval wasn't needed, and the company was given an extra two years.
Key Facts
- •Toogood International Transport and Agricultural Services Ltd (the company) entered administration on 21 June 2022.
- •Administrators sought a 24-month extension to the administration period until 20 June 2026.
- •The primary issue was whether consent for the 2023 extension was required from creditors who had since been paid in full.
- •HSBC UK Bank plc was the only remaining secured creditor with an economic interest in the administration.
- •The company had approximately 565 unsecured creditors with debts totalling about £1.9 million.
- •Significant asset realisations, including recovery of directors' loan accounts and inter-company loans, were still pending.
Legal Principles
A secured creditor, for the purposes of Schedule B1 of the Insolvency Act 1986, is defined as 'a creditor...who holds...a security'. A creditor who has been repaid is no longer a creditor and therefore no longer a secured creditor.
Insolvency Act 1986, section 248
Only creditors with a real economic interest in the outcome of an administration should have a say in decisions concerning its continuance.
Re Biomethane (Castle Eaton) Ltd [2020] BCC 111; Re Burningnight Ltd (in administration) [2021] BCC 133; Re Lehman Brothers Europe Ltd [2020] EWHC 1369 (Ch); Re Pindar Scarborough Ltd (In Administration) [2024] EWHC 908 (Ch)
The court has jurisdiction to retrospectively validate an administration order if the criteria for such an order were satisfied.
Re Biomethane (Castle Eaton) Ltd [2020] BCC 111
Rule 15.11(1) of the Insolvency (England and Wales) Rules 2016 does not contradict section 248 of the Insolvency Act 1986 regarding the definition of a secured creditor.
Re Pindar Scarborough Ltd (In Administration) [2024] EWHC 908 (Ch)
Outcomes
The 2023 extension of the administration was deemed valid.
Creditors who had been paid in full were no longer considered secured creditors under section 248 of the Insolvency Act 1986; their consent was not required.
A further 24-month extension of the administration was granted, until 20 June 2026.
Significant asset realisations were still pending; the sole remaining secured creditor with an economic interest consented to the extension; and liquidation would be more costly and less beneficial to creditors.
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