In the matter of Central Properties Holdings Limited (in administration)

The court has jurisdiction under paragraph 98 of Schedule B1 to the Insolvency Act 1986 to make a conditional order discharging administrators from liability. The jurisdiction should be exercised cautiously. A prospective discharge is inappropriate where administrators may remain company officers for a potentially lengthy period, or where its conditionality could become entangled with disputes affecting a company voluntary arrangement. The court may also decline to stand over an application for later determination on paper where the administration has several possible exit routes and the issues are not sufficiently advanced.

Joint administrators applied for orders conditionally terminating the company’s administration under paragraph 79 of Schedule B1 to the Insolvency Act 1986 upon successful completion of a company voluntary arrangement, and conditionally discharging them from liability under paragraph 98.

The company had entered into a CVA, but creditor claims remained to be adjudicated and possible disputes could delay completion. The administrators wished to remain in office to preserve the moratorium and prevent the directors resuming control. The central issue was whether the court should grant prospective conditional relief and, after circulation of the draft judgment, whether the application should be stood over for determination on paper.

1. Jurisdiction. Following the analysis in Re Lehman Brothers International (Europe) (in administration) [2022] EWHC 2995 (Ch), the court had jurisdiction under paragraph 98 of Schedule B1 to make a conditional order for the administrators’ discharge from liability.
2. Discretion. The jurisdiction was not exercised. The administrators remained officers of the company under paragraph 69 of Schedule B1 and retained ultimate managerial powers while the CVA was in place. The company remained outside the control of its directors under paragraph 64. Although little further administrative work was anticipated, the administrators might remain in office for a significant period because adjudication disputes could delay distributions.
3. The proposed condition, namely successful completion of the CVA, created an undesirable risk that disputes between creditors and the CVA supervisors would become linked to whether the administrators had an effective discharge. The case was materially more complex than the LBUKRE application in Lehman Brothers, where the proposed exit route was dissolution under paragraph 84 of Schedule B1 and the condition had fewer moving parts.
4. The court therefore refused the conditional discharge. It did not consider the proposed stand-alone conditional termination order under paragraph 79 because there was no suggested benefit in making that order without a discharge order. The application was also refused insofar as it sought to stand over the discharge application for later determination on paper. The administration’s eventual exit route remained open, and applications under paragraphs 79 and 98 were not sufficiently advanced to justify departing from the usual course.