World Class Homes Ltd, Re

When choosing between competing nominees for appointment as administrators, the court must assess which appointment best serves the administration. A creditor headcount is not conclusive and may be unreliable unless the circumstances and information given to creditors are known. General loss of confidence in the company or its directors does not establish loss of confidence in a nominee’s independence. Relevant practical factors include the nominee’s existing knowledge of the company, contact with prospective purchasers, ability to act efficiently, and available resources. Where nominees are otherwise evenly balanced, comparatively minor advantages may determine the appointment.

World Class Homes Limited applied for an administration order after service of a statutory demand and presentation of a winding-up petition. Administration was not opposed, since the statutory conditions were satisfied. The dispute concerned the identity of the administrators. The director proposed nominees from BDO Stoy Hayward, while the petitioning creditor proposed Jeremy Hugh Burman. The creditor relied on creditor preferences, alleged failures to provide information, and concerns about independence. The central issue was which nominees should be appointed.

1. Administration order and appointment. The statutory preconditions for administration were satisfied. Mr Justice Lindsay appointed Geoffrey Stuart Kinman and Anthony John Sanderson of BDO Stoy Hayward as administrators.
2. Creditor preferences. A creditor headcount was not conclusive. Its reliability depended on what creditors had been told and on the disputed status and independence of particular creditors. In the circumstances, the headcount carried little weight.
3. Confidence and independence. Criticism of the company’s or director’s conduct, including delay or resistance in providing information, did not by itself justify loss of confidence in the proposed administrators. There were no reasonable grounds to doubt BDO Stoy Hayward’s independence, impartiality or ability to perform their duties.
4. Comparative practical factors. The court considered BDO Stoy Hayward’s existing acquaintance with the company’s affairs and its contact with prospective purchasers to be significant. Its Portuguese offices and the nomination of two administrators were minor additional advantages. The approach in Re Maxwell Communication Corporation plc [1992] BCLC 465 provided useful guidance, although the statutory regime was different. The court attached greater weight to practical familiarity and likely efficiency than to speculative creditor perceptions.
5. Supervision of administration. The court declined to impose a formal requirement for prior approval of asset sales or continuing creditor information. Such requirements could cause unnecessary expense, delay and loss of confidentiality. The matter was left to the administrators’ judgment.
6. Costs. BDO Stoy Hayward’s attendance costs were not authorised. The petitioner’s costs and the creditor’s costs of attending the application were ordered as costs of the administration.