Lehman Brothers (PTG) Ltd (in administration), Re

The court has a broad discretion to extend an administration, but must exercise it judicially and on the evidence. Where a company is in distribution mode, liquidation may offer no advantage and may cause disadvantages, including the loss of fiscal or group benefits. That consideration qualifies, but does not replace, the usual questions: why the administration remains incomplete; whether another insolvency regime is more suitable; whether the extension is likely to achieve the administration’s purpose; and the appropriate duration. The court must always assess the balance between continuing administration costs and expected recoveries. Long duration is a reason for careful review, rather than an automatic reason to refuse an extension.

The joint administrators of Lehman Brothers (PTG) Ltd, in administration since 2008, applied for a further two-year extension of the administration period to 30 November 2025. The company had been in distribution mode since 24 June 2013. Further recoveries were expected from an Italian liquidation, another Lehman entity and statutory interest entitlements, but the amounts and timing remained uncertain.

The central issues were whether the administration should continue rather than move to liquidation or dissolution, whether an extension was likely to achieve the purpose of the administration, and whether the two-year period sought was justified in light of continuing costs and expected recoveries.

1. The application was granted. The administration was extended to 30 November 2025.

2. The statutory jurisdiction arose under paragraph 76(2)(a) of Schedule B1 to the Insolvency Act 1986. The court’s discretion was at large, but had to be exercised judicially. The exceptional length of the administration and the requested extension required careful review, but did not themselves justify refusal.

3. Because PTG was in distribution mode under paragraph 65 of Schedule B1, the usual questions identified in Re TPS Investment (UK) Ltd (In Administration) had to be read with an important qualification. Liquidation might offer no advantage and could cause disadvantages through a change of form and personnel and the loss of group relief or other fiscal benefits. The four questions remained relevant: why the administration was incomplete; whether another insolvency regime was more suitable; whether the extension was likely to achieve the administration’s purpose; and the appropriate duration.

4. There were good reasons for the administration’s continuation. Further substantial recoveries remained possible, and continuing the administration was reasonably likely to achieve its purpose of collecting and distributing funds. Liquidation was generally less suitable in the circumstances, while dissolution under paragraph 84 of Schedule B1 would risk the loss of unquantified benefits.

5. The court had to address continually the balance between administration costs and expected recoveries. The distribution-mode assumption did not relieve administrators of that obligation. Future applications should, where possible, provide ranges of expected outcomes and continuing cost information so that the court could assess the likely net advantage.

6. The requested duration was justified by the time potentially needed to obtain recoveries and resolve contingencies, particularly in relation to the Italian insolvency, and by the advantage of aligning PTG’s administration with that of Eldon Street Holdings Ltd.