Insolvency Act 1986, Schedule B1, paragraph 99

SCHEDULE B1 ADMINISTRATION

99(1)This paragraph applies where a person ceases to be the administrator of a company (whether because he vacates office by reason of resignation, death or otherwise, because he is removed from office or because his appointment ceases to have effect).

(2)In this paragraph—

  • “the former administrator” means the person referred to in sub-paragraph (1), and

  • “cessation” means the time when he ceases to be the company’s administrator.

(3)The former administrator’s remuneration and expenses shall be—

(a)charged on and payable out of property of which he had custody or control immediately before cessation, and

(b)payable in priority to any security to which paragraph 70 applies.

(4)A sum payable in respect of a debt or liability arising out of a contract entered into by the former administrator or a predecessor before cessation shall be—

(a)charged on and payable out of property of which the former administrator had custody or control immediately before cessation, and

(b)payable in priority to any charge arising under sub-paragraph (3).

(5)Sub-paragraph (4) shall apply to a liability arising under a contract of employment which was adopted by the former administrator or a predecessor before cessation; and for that purpose—

(a)action taken within the period of 14 days after an administrator’s appointment shall not be taken to amount or contribute to the adoption of a contract,

(b)no account shall be taken of a liability which arises, or in so far as it arises, by reference to anything which is done or which occurs before the adoption of the contract of employment, and

(c)no account shall be taken of a liability to make a payment other than wages or salary.

(6) In sub-paragraph (5)(c) “wages or salary” includes—

(a)a sum payable in respect of a period of holiday (for which purpose the sum shall be treated as relating to the period by reference to which the entitlement to holiday accrued),

(b)a sum payable in respect of a period of absence through illness or other good cause,

(c)a sum payable in lieu of holiday,

F1391(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., and

(e)a contribution to an occupational pension scheme.

Definitions used in Schedule B1, paragraph 99 3

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
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

Cases considering Schedule B1, paragraph 99 37

Jeremy Charles Frost & Anor v The Good Box Co Labs Limited & Ors

[2025] EWCA Civ 252 · 12 March 2025

On cessation of office, outstanding remuneration and expenses remain charged on and payable out of the company property in the administrators’ custody or control immediately before they ceased office. The court applied this provision to the administrators’ potential entitlement up to the fees estimate. (see paras [39]; [54]; [63(1)])

Debenhams Retail Ltd, Re

[2020] EWCA Civ 600 · 6 May 2020Limits

The Court treated liabilities arising under adopted employment contracts as charged on the relevant property with statutory priority under the paragraph 99 regime. This consequence explained the significance of deciding whether contracts had been adopted (see paras [3]; [28]-[30]). Paragraph 99(5) governed whether an employment contract had been adopted and the super-priority consequences for qualifying post-adoption liabilities. The Court held that the administrators’ conduct in paying furlough remuneration and retaining employees amounted to adoption for that purpose (see paras [53]-[55]; [65]; [70]). The provision gives administrators an initial 14-day period in which actions do not amount or contribute to adoption. The Court assessed the administrators’ continuing conduct after that protected period (see paras [30]; [53]; [65]). The Court described the statutory limitation that excludes liabilities arising by reference to matters occurring before adoption. It formed part of the statutory consequences of adoption considered in the appeal (see paras [28]; [30]). The Court described the limitation of super-priority liabilities to wages or salary. It provided the statutory context for the financial consequences of adoption (see paras [28]; [30]-[31]). The Court noted that wages or salary includes holiday and sickness payments. This informed the potential super-priority exposure for holiday pay after adoption (see paras [28]; [30]-[31]).

Hellas Telecommunications (Luxembourg) II SCA, Joint Liquidators of v Slaughter and May (a firm)

[2016] EWCA Civ 474 · 24 May 2016

Applied to recognise a statutory charge protecting former administrators’ outstanding remuneration and costs, which could be enforced against the company’s assets after administration. (see paras [33]; [37(e)]; [48])

17 more judgments, and what each says about Schedule B1, paragraph 99, are in the case-law panel in the full Act.

Amendments and notes

6 notes from legislation.gov.uk

Amendments

  1. F1391Sch. B1 para. 99(6)(d) omitted (26.5.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(3)(n), Sch. 6 para. 27

Modifications

  1. C1481Sch. B1 paras. 98-107 modified (5.7.2018) by Housing and Planning Act 2016 (c. 22), s. 216(3), Sch. 5 Pts. 1, 2; S.I. 2018/805, reg. 3(b)
  2. C1483Sch. B1 paras. 98-104 applied (with modifications) (E.W.) (15.3.2024) by The Water Industry (Special Administration) Regulations 2024 (S.I. 2024/205), regs. 2(2), 5(1), 34-37 (with reg. 64)
  3. C1484Sch. B1 para. 99 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 145, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 3
  4. C1485Sch. B1 para. 99 applied (with modifications) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), regs. 2, 37 (with reg. 5) (as amended (4.1.2024) by S.I. 2023/1399, regs. 1(2), 4, 11)
  5. C1486Sch. B1 para. 99(3) applied by The Financial Market and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979), reg. 14(5)(a)(iii) (as substituted (1.10.2009) by The Financial Markets and Insolvency (Settlement Finality) (Amendment) Regulations 2009 (S.I. 2009/1972), reg. 4(d)(iii))