Bowen Travel Ltd, Re

When seeking an administration order under the Insolvency Act 1986, applicants must provide reliable evidence. That requires accurate and truthful evidence, a clear account of potentially relevant facts, and explanations supported by the underlying material and realistically credible. The court must first consider whether administration is likely to produce a better result for creditors than winding-up. It must then exercise its broader discretion to decide what order is just and appropriate in all the circumstances. An apparent advantage in administration does not compel an administration order where the evidence is unreliable, liquidation is inevitable, creditor participation is important, and compulsory winding-up would facilitate statutory investigations.

The majority of the directors of Bowen Travel Limited applied for an administration order and the appointment of joint administrators. The application was made urgently after TUI had presented a winding-up petition, the company’s bank account had been frozen, and funds were insufficient to meet wages. An interim order subsequently appointed proposed administrators as managers with administrators’ powers.

TUI later withdrew its petition and supported a rapid liquidation involving a new insolvency practitioner. The court considered the reliability of the directors’ evidence, the likely comparative returns under administration and winding-up, the interests of creditors and holidaymakers, and the Official Receiver’s statutory investigative role.

1. The administration application was refused. A compulsory winding-up order was made.
2. Under paragraph 13 of Schedule B.1 to the Insolvency Act 1986, the court must first ask whether administration is reasonably likely to achieve a better result for creditors than winding-up. That answer does not determine the application automatically. The court retains a discretion to make the order that is just and appropriate in all the circumstances.
3. Evidence supporting an administration application must be reliable. It must be factually accurate and truthful, give a clear account of all potentially relevant circumstances, and ensure that explanations, estimates and opinions are supported by the underlying material, are not contradicted by it, and are realistically credible. Material inconsistencies, unexplained omissions and contradictions with company documents may undermine confidence in the evidence and reduce the weight given to professional opinions based upon it.
4. Although administration offered a small apparent financial advantage and possible continuity of the existing managers’ work, liquidation was inevitable. The evidence raised substantial concerns about intra-group indebtedness, transactions at possible undervalue and the conduct of the company’s directors. Those matters made prompt creditor involvement and fresh professional participation important considerations.
5. The compulsory winding-up route was appropriate because the Official Receiver could act promptly and had a statutory duty under section 132 of the Insolvency Act 1986 to investigate the company’s failure, business, dealings and affairs, with power to report to the court. The consequences of section 127 did not outweigh those considerations after TUI withdrew its petition.