Hartley Pensions Limited (in administration) v Wilton UK (Group) Limited

An administration order may be made where the applicant has standing as a creditor, the company is unable, or is likely to become unable, to pay its debts, and administration has a real prospect of achieving a statutory purpose. The debt relied on for standing need not be free from a bona fide dispute on substantial grounds. The court must compare the likely outcomes of administration and liquidation, including the benefits of continued trading, asset realisation and timing. Evidence supporting an administration application must be reliable, but the level of detail required depends on the circumstances and the applicant’s role. The court may grant relief on the assumption that an earlier appointment was invalid and may give the order retrospective effect where this protects steps already taken.

Hartley Pensions Limited, itself in administration, applied for an administration order in respect of Wilton UK (Group) Limited. An earlier out-of-court appointment of administrators was potentially invalid because of issues concerning a floating charge created within the relevant period under the Insolvency Act 1986. Wilton was also subject to a winding-up petition presented by Colm John O’Sullivan and Most Consulting Limited.

The court had to determine whether Wilton should be placed into administration, thereby regularising the position and preserving continued trading, or whether winding-up proceedings should continue. The issues included standing, insolvency, the statutory purpose of administration, the reliability of the evidence, the suitability of the proposed administrators and whether any order should have retrospective effect.

1. Administration order made. The court made an administration order in relation to Wilton UK (Group) Limited with retrospective effect. The winding-up petition therefore fell to be dismissed under paragraph 40 of Schedule B1 to the Insolvency Act 1986.
2. Hartley had standing as a creditor. It was not necessary, for an administration application, that the debt relied on be free from a bona fide dispute on substantial grounds: Hammonds v Pro-Fit USA Ltd [2007] EWHC 1998; [2008] 2 BCLC 159.
3. The company was insolvent on at least a cash-flow basis. There was a real prospect that administration would achieve a better result for creditors as a whole than an immediate winding up, principally because continued trading would preserve going-concern value, improve debt recovery and work-in-progress realisations, reduce delay and limit potential liabilities to Hartley. The possible advantages of section 127 did not outweigh those benefits on the evidence.
4. The evidence supporting an administration application must be reliable. This requires a clear account of potentially relevant facts, supported and credible estimates, and no misleading omission. The detail reasonably expected depends on the circumstances, including whether the evidence is given by a newly involved administrator rather than a long-serving director. The evidence here satisfied that standard: Re Bowen Travel Limited [2012] EWHC 3405.
5. The court proceeded on the worst-case assumption that the earlier appointment was invalid, adopting the approach identified in Re A.R.G. (Mansfield Ltd) [2020] BCC 641, rather than finally determining invalidity where that was unnecessary.
6. Retrospective effect was appropriate because the purported administrators had already entered commitments with landlords, employees and others. Any allegedly improper expenditure could be challenged on its merits rather than by invalidating acts undertaken during the period of uncertainty.