Insolvency Act 1986, Schedule B1, paragraph 78

SCHEDULE B1 ADMINISTRATION

78 (1) In paragraph 76(2)(b) “consent” means consent of—

(a) each secured creditor of the company, and

[F1362 (b) if the company has unsecured debts, the unsecured creditors of the company.F1362]

(2) But where the administrator has made a statement under paragraph 52(1)(b) “consent” means—

(a) consent of each secured creditor of the company, or

(b) if the administrator thinks that a distribution may be made to preferential creditors, consent of—

(i) each secured creditor of the company, and

[F1363 (ii) the preferential creditors of the company.F1363]

[F1364 (2A) Whether the company's unsecured creditors or preferential creditors consent is to be determined by the administrator seeking a decision from those creditors as to whether they consent.F1364]

F1365 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) An administrator’s term of office—

(a) may be extended by consent only once,

(b) may not be extended by consent after extension by order of the court, and

(c) may not be extended by consent after expiry.

(5) Where an administrator’s term of office is extended by consent he shall as soon as is reasonably practicable—

(a) file notice of the extension with the court, and

(b) notify the registrar of companies.

(6) An administrator who fails without reasonable excuse to comply with sub-paragraph (5) commits an offence.

Definitions used in Schedule B1, paragraph 78 4

consent

(3) But where the administrator has made a statement under paragraph 52(1)(b) “consent” means—

(a) consent of each secured creditor of the company, or

(b) if the administrator thinks that a distribution may be made to preferential creditors, consent of—

(i) each secured creditor of the company, and

(ii) the preferential creditors of the company.

Defined in Sch.B1 para.108(3) · see it in the full Act
the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act
company

(1A) In this Schedule, “company” means—

(a)a company registered under the Companies Act 2006 in England and Wales or Scotland,

(b)a company incorporated in an EEA State ..., or

(c)a company not incorporated in an EEA State but having its centre of main interests in a member State (other than Denmark) or in the United Kingdom .

Defined in Sch.B1 para.111(1A) · see it in the full Act
administrator

1 (1) For the purposes of this Act “administrator” of a company means a person appointed under this Schedule to manage the company’s affairs, business and property.

Defined in Sch.B1 para.1(1) · see it in the full Act

“administrator” has the meaning given by paragraph 1 and, where the context requires, includes a reference to a former administrator,

Defined in Sch.B1 para.111(1) · see it in the full Act

Cases considering Schedule B1, paragraph 78 8

VTB Capital Plc, Re

[2024] EWHC 2612 (Ch) · 10 October 2024Limits

The court treated paragraph 78(4)(a), together with paragraph 76(2)(b), as limiting the consensual extension of an administrator’s term to one extension of up to one year. The requested further extension was consequently determined by the court. (see para [23])

Mark Guy Boughey & Anor v Toogood International Transport and Agricultural Services Ltd (in administration)

[2024] EWHC 1425 (Ch) · 11 June 2024Limits

The provision identified the secured and unsecured creditors whose consent was required for the relevant extension. Its operation depended on the statutory meaning of secured creditor in section 248. (see para [7]) The provision limited use of the consent procedure to once. It explained why a further extension required a court application. (see para [10])

IN THE MATTER OF E REALISATIONS 2020 LIMITED (IN ADMINISTRATION)

[2022] EWHC 1575 (Ch) · 24 June 2022Limits

The provision defined the required consent in this administration as consent from each secured creditor and the preferential creditors, because the administrators had made a statement under paragraph 52(1)(b). The judgment observed that contingent consent obtained before a final extension decision may create uncertainty about the obligation to file notice of the extension and notify the registrar as soon as reasonably practicable (see para [25]).

What each judgment says about Schedule B1, paragraph 78 is in the case-law panel in the full Act.

Amendments and notes

5 notes from legislation.gov.uk

Amendments

  1. F1362Sch. B1 para. 78(1)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 10(25); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)
  2. F1363Sch. B1 para. 78(2)(b)(ii) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 10(26); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)
  3. F1364Sch. B1 para. 78(2A) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 10(27); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)
  4. F1365Sch. B1 para. 78(3) omitted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by virtue of Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 10(28); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications

  1. C1453Sch. B1 para. 78(5) modified (E.W.) (31.1.2019) by The Further Education Bodies (Insolvency) Regulations 2019 (S.I. 2019/138), regs. 1(1), 30 (with regs. 1(2), 3(a)(ii))