Nortel Networks France SAS, Re

The court may terminate an administrator’s appointment when the purpose of the administration has been sufficiently achieved. It may make termination conditional on a specified future event where necessary to implement an orderly restructuring or dissolution. A court-appointed administrator may be discharged from liability where outstanding claims are extremely unlikely and interested persons have received notice. In a substantial remuneration application, the court must independently scrutinise whether remuneration is fair, reasonable and commensurate with the work. Where detailed review cannot be conducted proportionately without assistance, the court may appoint an independent expert assessor and permit payment subject to repayment of any sum later ordered to be refunded.

The joint administrators of a French company placed into administration in England applied for orders terminating their appointment, discharging them from liability and approving remuneration incurred in the administration and a related company voluntary arrangement.

The company’s creditors had been paid in full. The administrators proposed dissolution without liquidation by transferring the company’s assets and liabilities to its French parent. They sought termination before that transfer, an early discharge and approval of remuneration exceeding £1.6 million.

The central issues were whether the statutory conditions for termination and discharge were satisfied, and how the court should scrutinise the remuneration application where economically interested creditors had not independently reviewed the detailed schedules.

1. Termination. Under paragraph 79 of Schedule B1 to the Insolvency Act 1986, the administrators were required to apply for termination because the purpose of the administration had been sufficiently achieved. The creditors had been paid in full and the remaining step was the proposed dissolution and transfer. The court ordered that the appointment terminate on dissolution, subject to a return to court if the transaction did not proceed as anticipated.
2. Discharge. The court granted a discharge under paragraph 98 of Schedule B1. There were no known unresolved claims, interested persons had received notice and no objections had been raised. The discharge was effective on the later of filing the final receipts and payments account with the order or 31 October 2019. The court departed from the usual 28-day practice referred to in Re Lehman Brothers Holdings UK Limited (in administration) [2016] EWHC 3552 (Ch) because the cross-border timetable required expedition.
3. Remuneration. The court declined to give final approval without further assistance. The application was substantial, no independent insolvency practitioner had scrutinised the schedules, and economically interested creditors had not positively supported the claim. The court could not reliably determine unaided whether the administration had delivered value for money.
4. The appropriate course was to appoint an expert assessor under section 70 of the Senior Courts Act 1981 and CPR 35.15. The assessor was to report independently on whether the remuneration was fair, reasonable and commensurate with the work, applying paragraphs 21.2 and 21.4 of the Insolvency Practice Direction. The review was to focus on the categories most likely to assist the court and remain proportionate.
5. To avoid delaying the proposed transfer, the administrators could receive the claimed remuneration subject to a £150,000 retention and an undertaking to repay any amount subsequently ordered to be refunded.