71(1)The court may by order enable the administrator of a company to dispose of property which is subject to a security (other than a floating charge) as if it were not subject to the security.
(2)An order under sub-paragraph (1) may be made only—
(a)on the application of the administrator, and
(b)where the court thinks that disposal of the property would be likely to promote the purpose of administration in respect of the company.
(3)An order under this paragraph is subject to the condition that there be applied towards discharging the sums secured by the security—
(a)the net proceeds of disposal of the property, and
(b)any additional money required to be added to the net proceeds so as to produce the amount determined by the court as the net amount which would be realised on a sale of the property at market value.
(4)If an order under this paragraph relates to more than one security, application of money under sub-paragraph (3) shall be in the order of the priorities of the securities.
(5)An administrator who makes a successful application for an order under this paragraph shall send a copy of the order to the registrar of companies before the end of the period of 14 days starting with the date of the order.
(6)An administrator commits an offence if he fails to comply with sub-paragraph (5) without reasonable excuse.
Cases considering Schedule B1, paragraph 71 22
[2024] EWCA Civ 1005 · 5 September 2024
The court applied paragraph 71 in assessing prejudice. Administrators could dispose of property subject to a fixed charge only with court authorisation, where the sale was likely to promote the administration, and on terms applying net proceeds to the secured debt. (see paras [38]-[39])
[2014] EWCA Civ 639 · 21 May 2014Interprets
The jurisdiction arises where the proposed disposal is likely to promote the purpose of the administration. The court must then consider whether a proper price will be obtained and balance prejudice to the secured creditor against prejudice to those interested in promoting the administration’s purpose. The provision may be used before a creditors’ meeting where commercial urgency justifies proceeding (see paras [47]-[50]; [70]; [80]).
[2025] EWHC 2159 (Ch) · 18 August 2025
The court used paragraph 71 to authorise the administrator to sell charged property as if it were not subject to the securities, while preserving the secured creditors’ priority in the net proceeds. (See paras [82]-[91].)
The court found that the application was made by the administrator and that disposal was likely to promote the purpose of the administration. (See paras [82], [85].)
The court directed that the net proceeds be applied in the order of priority of the securities, so Milltom ranked first subject to any challenge by Supahome. (See paras [83]-[85], [95].)
2 more judgments, and what each says about Schedule B1, paragraph 71, are in the
case-law panel in the full Act.