What happens if an application to the court for an order extending the period of administration is made before expiry of the period but the court does not hear the application until after the period has expired?
Paragraph 77(1) of Schedule B1 to the Insolvency Act 1986 says that an order of the court [extending the administrator’s term of office] may be made in respect of an administrator whose term of office has already been extended by order or by consent, but may not be made after the expiry of the administrator’s term of office.
The first and obvious point to make is that the administrator should make his application in good time for it to be heard before the period expires. Nevertheless sometimes things do go wrong. In Re T.T. Industries & Anor (Unreported, 26 April 2005. Chancery Division (Birmingham District Registry) (HHJ Norris QC)) the application was made 3 days before expiry of the period but not issued by the court until 20 days later (i.e. 17 days after expiry) and not heard for another 14 days after that, i.e. 31 days after expiry of the period. The case came on in the Birmingham District Registry and the Judge (HHJ Norris QC) said that in the Birmingham Court there was a procedure in such cases whereby the matter is immediately referred to a judge who makes what is effectively an interim order, extending the period until the application can be heard. For some reason that was not done in this case.
The judge reviewed a number of old cases, in other contexts, where an application for a court order which could only be made before a certain date was filed before that date but, because of court delays, was not actually heard (or decided) until after that date. On the principle that unavoidable delays in the administration of justice should not interfere with the rights of the parties the Judge in this case was able to construe the relevant provisions so as not to deprive the court of jurisdiction to make an order extending the administration provided that (i) the application for the extension was made before expiry of the administrator’s term of office and (ii) there was a real possibility that the way the application was handled by the court contributed to the fact that no order was made within that period.
On that basis the court made an order extending the administrator’s terms of office in respect of the two companies concerned.
The judge expressly stated that he was following the approach adopted in the earlier cases "in the narrowest terms". It would clearly be wise for administrators to do their best to ensure that they do not have to rely on this.
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The original publication date for this article was 16/03/2006.