Greensill Capital (UK) Limited And Greensill Capital Management Company (UK) Limited

An administration order requires the court to be satisfied that the company falls within the statutory jurisdiction, is unable or likely to become unable to pay its debts, and that administration is reasonably likely to achieve the statutory purpose. That purpose may be met where administration offers creditors a better result than winding up, including through a pre-packaged sale preserving valuable assets, business continuity or employment. The court may make the order where the procedural requirements have been complied with and the evidence establishes each substantive condition.

The directors applied for administration orders in respect of Greensill Capital (UK) Limited and Greensill Capital Management Company (UK) Limited. The first company arranged trade finance and the second supplied employees to it. The application concerned whether the companies fell within the statutory definition, whether they were unable or likely to become unable to pay their debts, and whether administration would be reasonably likely to achieve a better result for creditors than winding up.

The proposed administrators intended to implement a pre-packaged sale of valuable intellectual property and IT systems and to transfer most of the service company's employees to the proposed purchaser.

1. Statutory requirements. The court identified three requirements for an administration order: the companies must fall within paragraph 111(1A) of Schedule B1 to the Insolvency Act 1986; each must be unable or likely to become unable to pay its debts; and an administration order must be reasonably likely to achieve the purpose of the administration.
2. Insolvency. The first company was cash-flow insolvent. It had ceased trading and faced an immediately payable guarantee liability of US$140 million without sufficient cash to meet its debts as they fell due. The second company was necessarily cash-flow insolvent because it depended on the first company to fund its payroll obligations to more than 500 employees.
3. Purpose of administration. The purpose was not to rescue the companies as going concerns, but to achieve a better result for creditors as a whole than would be likely on a winding up. Administration was reasonably likely to achieve that purpose because liquidation would be more cumbersome and administration would permit the proposed sale of the valuable intellectual property and IT systems, together with the transfer of most employees and continuation of the business.
4. Procedure and order. Notice had been given to the relevant parties and to the Bank of England under sections 120 and 120A of the Banking Act 2009. The other procedural requirements had been met, and the notified parties did not oppose the application. Administration orders were therefore made in the court's discretion.

Not an appeal. The judgment records no prior appellate history.