Hotel Company 42 the Calls Ltd, Re

An administration should ordinarily end once its statutory purpose has been achieved, even though the administrators’ remuneration remains disputed. The statutory charge securing former administrators’ remuneration and expenses is enforceable by the court through its inherent jurisdiction, including by a receiver or sale order where appropriate. The charge may be protected by registration against the relevant estate. Administrators therefore need not remain in office merely to protect their remuneration, and should not be authorised to grant themselves a wider charge than the statutory charge.

Hotel Company 42 The Calls Limited had entered administration after substantial creditor claims and difficulties in obtaining information from those controlling the company. By the hearing, the company had been rescued as a going concern. Shepherd Construction Limited’s debt and the other known liabilities had been paid or waived.

The administrators accepted that there was no practical reason for the administration to continue, subject principally to protection for their outstanding remuneration and expenses. They sought authority to grant themselves a charge over the company’s assets. The respondents opposed continuation and challenged the remuneration. The court also considered the statutory charge under paragraph 99 of Schedule B1 to the Insolvency Act 1986, its enforcement, and its protection on the register.

1. Administration terminated. The administration purpose had been wholly achieved. The administrators’ concerns about recovery of remuneration did not justify keeping them in office, particularly since the statutory charge provided adequate protection.
2. Enforcement of statutory charge. Paragraph 99(3) of Schedule B1 to the Insolvency Act 1986 charges the former administrator’s remuneration and expenses on property formerly in the administrator’s custody or control. Although the Act provides no express enforcement machinery, the court has inherent power to enforce the charge, including by appointing a receiver or ordering a sale. This was recognised in Re MK Airlines Limited [2012] EWHC 1018 (Ch).
3. Registration. The statutory charge affected the company’s legal interest in the hotel and could in principle be protected by an agreed notice under sections 29, 30 and 32(1) of the Land Registration Act 2002. The court considered refusal by the registrar inconceivable on the facts.
4. No wider self-created charge. There was no justification for authorising the administrators to grant themselves a charge more extensive than the statutory charge. Any identified illicit conduct could be addressed by separate injunctive relief, subject to the ordinary requirement of a cross-undertaking in damages.
5. The administrators’ discharge under paragraph 98 of Schedule B1 was not to be effected while the unfair-harm and misfeasance proceedings remained unresolved. Their discharge was postponed until further order.