Court remedies defect after failure to extend administration
Administrators had failed to extend an administration, due to an innocently made error in failing to seek the consent of four secured creditors.
A creditor applied for an order to place the company back into administration, effective from the expiry of the previous administration.
The court had to decide whether it had the power to do so, and if so, whether it was appropriate to make such an order having retrospective effect.
It was held that the court did have the power to make a retrospective administration order. A natural reading of para.13(2) of Sch.B1 was that it had prospective effect only, but it had consistently been interpreted by the courts as being wide enough to allow an order having retrospective effect to be made in order to rectify a defect, and for good pragmatic reasons.
On whether the order was appropriate, making it would not adversely or materially affect vested rights, and given the extent of the administrators' acting since 2 May 2024, and the problems which could arise if nothing they had done since had any legal basis, it was appropriate the appointment be made retrospective.
Methodist Homes, Petitioner [2025] 1 WLUK 36
Our content explained
Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.