BHS Ltd, Re

The court may appoint concurrent administrators where the statutory jurisdictional requirements are satisfied and the appointment serves the creditors’ interests. Their functions may be limited under Schedule B1 to the Insolvency Act 1986 by reference to a protocol allocating responsibilities between office-holders. The protocol may form part of the appointment order. Minor agreed variations need not return to court, but a significant change to the basis of appointment or to the office-holders’ functions should be brought before the court. The court should also consider whether concurrent appointments will materially increase the administration’s costs.

BHS Limited was in administration following its appointment by the company’s directors. The original administrators continued trading the business while investigating possible claims concerning the company’s affairs and the conduct of its directors. Creditors approved proposals requiring an application for the appointment of concurrent administrators, supported by the Pension Protection Fund, the company’s largest unsecured creditor.

The proposed concurrent administrators would conduct investigations and consequential claims, while the original administrators continued trading and realising assets. The central issues were whether the statutory conditions for appointment were met, whether the proposed division of functions could properly be embodied in a court order, and whether the appointment was appropriate having regard to creditors’ interests and costs.

The application was granted and the court approved the appointment of two concurrent administrators.

1. The statutory conditions in Schedule B1 to the Insolvency Act 1986 were satisfied. The company was in administration, the application was made by the existing administrators, and they consented to the appointment. The appointment was also required by the creditors’ approved proposals.

2. Under paragraph 100(2) of Schedule B1, the appointment order could specify the functions to be exercised by the administrators. The court had jurisdiction to limit the concurrent administrators’ functions by incorporating the agreed protocol into the order.

3. The protocol clearly allocated responsibility. The concurrent administrators would conduct investigations and consequential claims. The original administrators would conduct the remaining administration functions, including trading and asset realisations. The arrangements were directed to enabling investigations to begin promptly while allowing the business to continue trading before liquidation.

4. The court considered Re Angel Group Ltd [2015] EWHC 3624 (Ch), where a similar protocol had been sanctioned. Although the circumstances and basis of appointment differed, the underlying concept was the same.

5. The protocol could be amended by agreement. Minor variations could be made without returning to court, but a significant change to the basis of appointment or to the functions assigned should be referred back for the court’s sanction. The administrators were left to exercise judgment on whether that threshold was met.

6. The court was satisfied that concurrent appointments would not materially increase the estimated administration costs, because the existing estimate already included investigations as a whole.

The order appointing the concurrent administrators was approved.

not stated in the judgment.