Symm & Company Ltd, Re V

The company or its directors cannot appoint an administrator out of court hours by electronic filing. The Insolvency Rules 2016 deliberately permit such appointments only by a qualifying floating charge holder, subject to prescribed safeguards. The electronic-working provisions concern the mechanics of delivery and do not enlarge that substantive power. A notice filed electronically out of hours by directors is therefore defective, but the defect may be cured as an irregularity under Rule 12.64 where it causes no substantial injustice. The appropriate cure is to treat the notice as filed when the court next opens, rather than at the time of the out-of-hours electronic filing.

The directors of Symm & Company Limited filed a notice of appointment of administrators by CE-File at 17:36 on 4 February 2020, when the court was closed. The filing was made under Rule 3.25 of the Insolvency Rules 2016, which applies where there has been no prior notice of intention to appoint an administrator.

The court considered conflicting first-instance decisions concerning whether directors could make an out-of-hours electronic appointment, including Re HMV Ecommerce Ltd, Re Skeggs Beef Limited, Re SJ Henderson & Company Limited, Re Keyworker Homes (North West) Limited and Re All Star Leisure (Group) Ltd. The central issues were whether the filing was permissible, and, if not, whether and how the defect could be cured.

1. The notice of appointment filed by the directors outside court hours was not effective at the time of electronic transmission. Paragraphs 22, 29(1) and 31 of Schedule B1 to the Insolvency Act 1986, read with the Insolvency Rules 2016, require the statutory filing requirements to be satisfied before the appointment takes effect.
2. The Insolvency Rules 2016 distinguish between appointments by a qualifying floating charge holder and appointments by a company or its directors. Rules 3.20 to 3.22 provide an out-of-hours mechanism only for qualifying floating charge holders. The absence of an equivalent mechanism for directors reflects a deliberate policy and does not amount to permission for directors to appoint out of hours.
3. Rule 1.46 of the Insolvency Rules 2016 does not alter that conclusion. It governs the mechanics of electronic delivery where such delivery is permitted by the CPR, a practice direction or the Rules. Paragraph 2.1 of the Electronic Working Pilot Scheme, as applied through paragraph 8.1 of the 2018 Insolvency Practice Direction, does not permit an out-of-hours directors’ appointment.
4. The court preferred the reasoning of ICCJ Burton in Re SJ Henderson & Company Limited and Marcus Smith J in Re Skeggs Beef Limited. The contrary approaches in Re Keyworker Homes (North West) Limited and Re All Star Leisure (Group) Ltd were not accepted.
5. The defect was an irregularity causing no substantial injustice and was capable of cure under Rule 12.64. The cure could not retrospectively make the appointment effective at the time of the out-of-hours CE-File transmission, because that would circumvent the restriction on directors’ out-of-hours appointments. The notice was instead treated as filed when the court opened at 10:00 on 5 February 2020, and the administrators’ appointment took effect then.