Security Trustee Services Ltd & Ors v Seabrook Road Ltd (Re Seabrook Road Ltd) (Rev 1)

A notice of intention to appoint an administrator is valid only where the company has a genuine and settled intention to make the appointment. A conditional or tactical notice does not satisfy the statutory requirements. Notice must also be given to any qualifying floating charge holder entitled to appoint an administrator. Failure to give that notice is a serious breach and may render the notice an abuse of process. An invalid notice does not trigger the interim moratorium under Insolvency Act 1986, Schedule B1, and the court may order its removal from the court file.

Security Trustee Services Ltd and two receivers applied for orders removing notices of intention to appoint an administrator filed by Seabrook Road Ltd, declaring the receivers’ appointment valid and permitting their continued acts. The notices stated that notice had been given to the qualifying floating charge holder, but it had not been served. The evidence also showed that Seabrook had treated administration as a last resort, continued negotiations for further time and never attempted to appoint an administrator. The central issues were whether the notices complied with Schedule B1 and whether they validly triggered the interim moratorium.

1. The application was granted. The notices of intention to appoint an administrator were ordered to be removed from the court file. The appointment of the receivers was declared valid, and the requested consequential relief was granted.

2. Under paragraphs 26 to 28 of Schedule B1 to the Insolvency Act 1986, a company must have a genuine and settled intention to appoint an administrator. The procedure does not permit a conditional proposal or intention. The court applied the approach in JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd [2017] EWCA Civ 276.

3. The company was required to give at least five business days’ written notice to the qualifying floating charge holder. That requirement protects the charge holder’s opportunity to appoint its own administrator and forms an important check on the company’s power to appoint. The failure to give notice, despite the notices stating that notice had been given, was a serious and inexcusable breach and independently rendered the notices an abuse of process.

4. The evidence established that Seabrook did not possess the necessary intention when the notices were filed. Its statements that administration was a last resort, its continuing negotiations for time or indulgence, its failure to respond to the allegation that there was no genuine intention, and its failure ever to appoint an administrator supported the inference that the notices were filed to obtain a moratorium and negotiating leverage.

5. Because the notices were invalid, the interim moratorium under paragraphs 44 and 43 of Schedule B1 never came into effect.