Orthios Eco Parks (Anglesey) Limited, Re
[2024] EWHC 3047 (Ch)
MTA Personal Injury Solicitors LLP (in administration) v Steven Wiseglass
23 August 2024
[2024] EWHC 2208 (Ch)
High Court
A former administrator's pay was initially approved by the court. However, new evidence showed the administrator didn't investigate enough, and was too friendly with a company director. So, the court canceled the pay approval and said they need a more detailed review of how much they should be paid.
Key Facts
- •MTA Personal Injury Solicitors LLP (LLP) was in administration.
- •Steven Wiseglass (Mr. Wiseglass) was the initial administrator, later replaced by joint administrators.
- •Mr. Wiseglass's remuneration and pre-appointment costs were initially approved by the court.
- •The joint administrators applied to review and potentially set aside the initial order.
- •Allegations of misconduct and insufficient investigation by Mr. Wiseglass were raised.
Legal Principles
Court's wide discretion to review, rescind, or vary orders under Insolvency Rules r. 12.59(1), equivalent to s. 375(1) of the Insolvency Act 1986.
Insolvency Rules 2016, r. 12.59(1); Insolvency Act 1986, s. 375(1); Broom v Aguilar [2024] EWHC 1764 (Civ); Re a Debtor (No 32 of 1991) [1993] 1 WLR 314; Papanicola v Humphreys [2005] 2 All ER 418; Holtham v Kelmanson [2006] EWHC 2588 (Ch)
Office-holders (administrators) are fiduciaries with an onus to justify their remuneration and provide sufficient information; must be frank with the court and creditors.
Brook v Reed (Practice Note) [2012] 1 WLR 419; Maxwell [1998] 1 BCLC 638
Breach of duty by a fiduciary doesn't automatically forfeit remuneration; proportionality and equity are considered.
Bowstead and Reynolds on Agency, 23rd Ed; Bank of Ireland v Jaffery [2012] EWHC 1377 (Ch)
Administrators must comply with SIP 2 (investigations) and the Insolvency Code of Ethics.
SIP 2; Insolvency Code of Ethics
Rule 3.70(1) requires departing administrators to deliver assets to successors, after deducting properly incurred expenses.
Insolvency Rules 2016, r. 3.70(1)
Paragraph 21 of the IPD sets out guiding principles for remuneration applications (justification, benefit of the doubt, value of service, fairness, reasonableness, proportionality).
Practice Direction: Insolvency Proceedings [2020] BCC 698
Outcomes
Application to set aside the approval of pre-appointment costs dismissed.
No specific criticism of pre-appointment conduct; previous objections addressed in the initial judgment.
Application to set aside the administrator's remuneration order granted.
Insufficient investigation by Mr. Wiseglass; lack of transparency and documentation; concerns about his relationship with Mr. Taylor; failure to comply with SIP 2 and the Ethics Code; evidence suggesting that Mr. Wiseglass acted favorably and leniently towards Mr. Taylor.
Mr. Wiseglass must account to the joint administrators for the balance of funds after deducting approved pre-appointment costs.
Rule 3.70(1) requires the transfer of assets; Mr. Wiseglass's interest is protected by a statutory charge.
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