Mond v Synergi Partners Ltd

A retrospective administration order cannot be made merely to validate a defective transition into liquidation. The court must be satisfied that the order is reasonably likely to achieve a statutory purpose of administration. That condition is not met where the proposed administration would be temporary and its sole purpose would be to facilitate a winding-up or preserve a liquidator’s prospective claim. The one-year limit on an administration also prevents successive retrospective orders being used to circumvent the statutory scheme. Where an administration application cannot properly achieve an administration purpose, the court may treat it as a winding-up petition and make the appropriate winding-up order.

A creditor applied for an administration order in respect of an insolvent company, retrospectively from the day after an earlier administration had ended. A purported move from administration to creditors’ voluntary liquidation had taken effect too late, leaving the proposed liquidators without valid appointments. The retrospective order was sought principally to validate their intervening acts and enable them to pursue a substantial wrongful trading claim.

The court considered whether the statutory conditions for administration were satisfied, whether an order could operate retrospectively for more than one year, and whether the application should instead be treated as a winding-up petition.

1. Retrospective administration. The court considered the reported decision in Re G-Tech Construction Limited [2007] BPIR 1275, but noted the uncertainty surrounding its jurisdictional reasoning and the absence of full argument. Even assuming that a retrospective administration jurisdiction existed, it had to be exercised with extreme caution.
2. Statutory purpose. Under paragraph 11 of Schedule B1 to the Insolvency Act 1986, the company’s inability to pay its debts was established. The second condition was not satisfied. An order retrospectively ending after one year would achieve nothing useful and could not rescue the company, produce a better result for creditors than an ordinary winding-up, or realise property for secured or preferential creditors. Its only purpose would be to recreate a temporary administration so that the company could be placed into liquidation.
3. Duration. Paragraph 76(1) of Schedule B1 limits an administration to one year. The court accepted the reasoning in Re Frontsouth (Witham) Limited and Limited [2011] EWHC 1668 (Ch) and Pillar Securitisation Sarl and Others v Spicer and Another [2010] EWHC 836 (Ch) that successive retrospective orders cannot be used to overcome that limit.
4. Alternative order. The proper course under paragraph 13(1)(e) of Schedule B1 was to treat the administration application as a winding-up petition. The company was clearly insolvent and winding-up was the appropriate insolvency regime because the only identified purpose was pursuit of a wrongful trading claim. The court could not direct who should be appointed liquidator. The applicant would have to seek the appointment of the proposed practitioners from the Official Receiver, Secretary of State or creditors.
5. The company was compulsorily wound up. The application and reserved costs, together with the cost of obtaining an approved transcript, were directed to rank as expenses of the liquidation.

The judgment records an earlier adjourned hearing before His Honour Judge Pelling QC on 13 February 2015. The matter was then heard and determined by His Honour Judge Hodge QC sitting as a Judge of the High Court.