Sole director resolution appoints administrators

The sole director of a company resolved to apply to court for an administration order. The company provided management services for the family of a Dr Kantor, a Russian businessman subject to sanctions. The company wasn't subject to sanctions and disputed that Dr Kantor had an interest in, or controlled it.

In any event, in light of the sanctions issue, the company and its sole director applied to court for an administration order in May 2024. A lack of funds caused by the sanctions led to the application being adjourned in July 2024 and the applicants proposing a further adjournment in October 2024.

This led to the majority creditor applying to be joined to the application to prevent such an adjournment and, as part of the decision, the deputy judge gave permission for the creditor to be joined.

As part of the application, the director made the court aware of prior contradicting decisions on whether a sole director could resolve to put a company in administration under the model articles.

The deputy judge agreed with the prior authority that such a resolution was valid, but all three decisions are first instance so a Court of Appeal decision will be required to provide complete clarity. However, the deputy judge made the administration order on the application of the majority creditor, to avoid the issue, if he was wrong on that point.

The deputy judge also found that the company was insolvent and that the purpose of the administration was reasonably likely to be achieved. 

Lastly, the deputy judge considered whether the sanctions prevented the making of the administration order, which he held that they did not, but accepted undertakings from the administrators that they would apply for relevant licences from the OFSI, in any event.

KRF Services (UK) Limited [2024] EWHC 2978 (Ch)

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