Beaufort Asset Clearing Services Ltd, Re

Where the special administration objectives of an investment bank have been sufficiently achieved, the special administrator may apply to end the administration even if some client assets remain. The court may then order the company’s compulsory winding up, although the legislation does not expressly provide for the transition from special administration to liquidation. The court should consider whether winding up safeguards remaining proprietary claims and provides an orderly exit, while recognising that administrators cannot be required to remain in office indefinitely at personal cost. Dissolution is inappropriate where client assets remain. The administrators must have taken all reasonable steps to return client assets and to wind up the company’s affairs in creditors’ interests. A discharge from liability may take effect after a further period allowing outstanding claims to be notified.

Beaufort Asset Clearing Services Ltd was in special administration under the Investment Bank Special Administration Regulations 2011. Its administrators sought an order ending their appointments and discharging them from liability, together with the company’s compulsory winding up. Beaufort Nominees Ltd and Raven Nominees Ltd, wholly owned nominee companies holding legal title to client assets, were separately petitioned for compulsory winding up.

The applications followed extensive efforts to return client assets. A substantial rump of assets and client money remained, and certain electronically held securities could become more difficult to access after liquidation. The central issues were whether the special administration objectives had been sufficiently achieved, whether the court had power to wind up a company emerging from special administration, and whether winding up was an appropriate exit route.

1. Termination of special administration. Under paragraph 79(3) of Schedule B1 to the Insolvency Act 1986, as modified by the Investment Bank Special Administration Regulations 2011, an application must be made where the special administrator considers that the special administration objectives have been sufficiently achieved. The court was satisfied that the return of client assets, engagement with the relevant authorities, and the achievement of the applicable winding-up objective had each been sufficiently achieved.
2. Power to wind up. The fact that BACSL remained in special administration did not prevent a winding-up order. The statutory scheme did not permit the company to be wound up while the administration continued, but it did not prevent the court ordering winding up once the administration had ended. The court also had power under paragraph 79(4)(d) of Schedule B1 to order winding up even without a winding-up petition.
3. Discretion. Compulsory winding up was an appropriate exit route. Dissolution was unavailable while client assets remained and would be undesirable because liquidation preserved, so far as possible, clients’ ability to assert proprietary rights. The administrators had taken all reasonable steps available to return the assets. They could not be required to keep the administration open indefinitely and incur its costs personally.
4. Nominee companies. BNL and Raven had no realisable assets or liabilities, but their winding up was appropriate because they were asset-holding companies connected with the safeguarding of BACSL’s client assets.
5. Discharge. The administrators’ discharge from liability was ordered to take effect 28 days after cessation of their appointments, following the approach described in Re Lehman Brothers Europe Ltd [2020] EWHC 1369 (Ch). This allowed time for any outstanding client claims to be notified.
6. Orders were made ending the administrators’ appointments, discharging them from liability after the 28-day period, and compulsorily winding up BACSL, BNL and Raven.

First-instance decision. No appellate history was stated in the judgment.