Care Matters Partnership Ltd, Re

An administration order must satisfy the statutory threshold conditions when the court makes the order. That is distinct from deciding when the order takes effect under paragraph 13(2)(a) of Schedule B1. Earlier insolvency cannot, by itself, justify a retrospective order if the conditions are no longer established at the hearing. Retrospective orders also require careful discretionary consideration, particularly where creditors have not participated. A procedural defect in an appointment may potentially be addressed under paragraph 104 of Schedule B1 where a power of appointment existed but was irregularly exercised.

The directors of Care Matters Partnership Ltd applied for the appointment of administrators with retrospective effect. The application followed doubts about the validity of appointments under Re Minmar (929) Ltd. The court was also referred to conflicting or questioning first-instance decisions concerning retrospective administration orders and validation of acts by a purported administrator.

The central issues were whether paragraph 11 of Schedule B1 required satisfaction of its conditions at the date of retrospective effect or at the hearing, and whether the court could make the proposed retrospective appointments or otherwise validate the administrators’ acts.

1. Threshold conditions. The court must first decide whether an administration order should be made at all. The conditions in paragraph 11 of Schedule B1, including inability to pay debts and the reasonable likelihood of achieving the purpose of administration, must be satisfied when the order is made. That question is separate from the question under paragraph 13(2)(a) of when the order takes effect.
2. Application. Although the company had been insolvent when the first appointment was made, the evidence did not establish any current administration objective reasonably likely to be achieved. The sale of the business did not rescue the company as a going concern, which remained heavily indebted and substantially assetless. The threshold conditions were therefore not satisfied.
3. Validation. The judge adhered, with misgivings, to G-Tech Construction Ltd, treating a fresh administration order with retrospective effect as the available solution in the present case. He maintained his view that paragraph 104 of Schedule B1 may assist where an existing power to appoint was defectively exercised through procedural irregularity, but may not assist where there was no power to appoint at all. The point was not argued and its full scope remained open.
4. Discretion. Even if an order had been legally available, the judge would not have made the proposed novel retrospective orders. The suggested consequences concerning successive appointments were uncertain, and creditors facing a substantial deficiency had not been heard. The applications were refused and permission to appeal was granted.

The judgment records no earlier appellate decision in this dispute. Permission to appeal was granted.