Marko Ventures v London Antiaging Clinic Ltd

An administration order may be sought by a creditor who has a good arguable case that a debt is owing, even if the debt is disputed. Where the alleged debt is also relied on to establish insolvency, it must be proved on the balance of probabilities.

The court must be satisfied that the company is, or is likely to become, unable to pay its debts and that administration is reasonably likely to achieve its purpose. The latter requires a real prospect supported by cogent evidence. Even when those conditions are met, the court retains a wide discretion. In a connected-party pre-pack, proper marketing and careful scrutiny are particularly important.

Marko Ventures Ltd, the majority shareholder and principal funder of London Antiaging Clinic Ltd, applied under paragraph 12(1)(c) of Schedule B1 to the Insolvency Act 1986 for an administration order.

The application was initially opposed by London Med Aesthetics Ltd and Dr Androulakakis. The issues included Marko Ventures’ standing, whether the company was unable to pay its debts, whether administration was reasonably likely to achieve its purpose, and whether the court should exercise its discretion to make the order.

The proposed outcome involved a connected-party pre-pack sale of the business to Reborne Longevity Ltd. Following further marketing and evidence, the opposition was withdrawn. The central issue was whether the statutory conditions and the court’s discretionary requirements had been satisfied.

1. Standing. A person may qualify as a creditor under paragraph 12(1)(c) of Schedule B1 where there is a good arguable case that a debt of sufficient amount is owing. The court may determine the application without resolving the underlying dispute. Marko Ventures had an undisputed debt under the loan notes, and therefore had standing.
2. Disputed debt and insolvency. If a disputed debt is relied on to establish that the company is or is likely to become unable to pay its debts, the debt must be proved on the balance of probabilities. The court nevertheless found insolvency independently established by the company’s trading losses, dependence on continued funding, unpaid trade creditors and balance-sheet deficit.
3. Statutory conditions. Under paragraphs 11(a) and 11(b) of Schedule B1, the company was unable, or likely to become unable, to pay its debts, and administration was reasonably likely to achieve the second statutory objective. Reasonably likely means a real prospect, supported by cogent and credible evidence rather than assertion.
4. The proposed administration offered creditors a better result than an immediate liquidation. The evidence showed that the connected purchaser would pay for the business, assume trade-creditor and employee liabilities, and that Marko Ventures would waive its substantial unsecured claims for dividend purposes. Trade creditors would probably be paid in full, employees retained, and a payment made to another significant creditor.
5. Discretion and pre-pack sale. Fulfilment of the statutory conditions did not compel an administration order. The court retained a wide discretion and was required to scrutinise the application closely, particularly because the proposed purchaser was connected with the applicant and the company’s beneficial owners. Proper marketing, consideration of alternative proposals, and appropriate SIP 16 documentation addressed the earlier concerns about haste and inadequate evidence.
6. The administration order was granted. Marko Ventures’ costs were payable as an expense of the administration under rule 3.12(2). There was no order as to costs for London Med Aesthetics Ltd and Dr Androulakakis.