Alldey Michael Loveridge v Craig Povey & Ors
[2024] EWHC 329 (Ch)
Stephen Louis Nardelli & Ors v Daniel Richardson & Anor
4 November 2024
[2024] EWHC 2740 (Ch)
High Court
Shareholders sued the administrators of their company for favoring a lender over them. The judge carefully reviewed the administrators' decisions and determined that, while maybe not perfect, their actions were reasonable given the company's difficult financial situation. The judge therefore decided against removing the administrators.
Key Facts
- •Three companies (CFJL, PPP, P3 Eco) were in administration.
- •Desiman, a secured creditor, appointed the joint administrators.
- •A likely surplus existed after paying creditors, leading to a potential return for shareholders.
- •A deal was made with Cala for the sale of land, increasing the lender's share of returns at the expense of shareholders.
- •The Third Applicant, Brigadier Inshaw, challenged the administrators' conduct, seeking their removal.
- •The First and Second Applicants became bankrupt during the proceedings.
- •The administrators' actions focused on maximizing returns for creditors while considering shareholders' interests.
- •Disputes arose regarding refinancing attempts, the sale process (including the choice of Cala over other bidders), and increases in Desiman's profit share.
Legal Principles
Administrators' duties and objectives under the Insolvency Act 1986 (IA 86), Schedule B1, paragraph 3.
Insolvency Act 1986
Order of priorities for distributing assets in administration.
Re Nortel GmbH [2013] UKSC 52
Administrators' duty to consider members' interests in balance sheet solvent companies.
Re Hat & Mitre PLC [2020] EWHC 2649 (Ch)
Directors' duties when a company is or is likely to become insolvent.
BTI 2014 LLC v Sequana SA [2022] UKSC 25
Administrators' duty to obtain the best price reasonably obtainable for assets.
Re Charnley Davies Ltd (No 2) [1990] BCC 605
Court's reluctance to interfere with administrators' commercial decisions.
Re Longmeade Ltd [2016] EWHC 356 (Ch)
Grounds for removing an administrator under IA 86, Schedule B1, paragraph 88.
Insolvency Act 1986, Schedule B1, paragraph 88
Concept of 'unfair harm' under IA 86, Schedule B1, paragraph 74.
Insolvency Act 1986, Schedule B1, paragraph 74
Outcomes
Removal Application dismissed.
The court found insufficient evidence to support the allegations of breach of duty or unfair harm by the administrators. The administrators' actions were deemed to be commercially justified and within their powers and duties.