Obtaining The Consent Of Unsecured Creditors To Administration Extensions

20th June 2023

Two commentaries in the leading practitioners’ textbook on the insolvency legislation, Sealy and Milman: Annotated Guide to the Insolvency Legislation 2023 Volume 1, are mistaken on the issue of whether the consent of a company’s unsecured creditors to an extension of administration can be obtained by using the deemed consent procedure in s.246ZF of the Insolvency Act 1986.

Ololade was recently instructed in an application by the administrators of a company to extend their term of office. Normally, such applications are straightforward but this one took an unexpected turn that, in the space of 48 hours, took the case from the Business and Property List in the Central London County Court to the Insolvency and Company Court’s Interim Applications List for an urgent hearing before ICC Judge Barber.

The attached note describes the issue that caused difficulty and concludes with some commentary from Ololade. The key take aways are: (1) administrators may obtain the consent of unsecured and preferential creditors to an extension by using the deemed consent procedure; and (2) two commentaries in Sealy and Milman are inconsistent with the decision in Re Biomethane (Castle Easton) Ltd; Baker v Biomethane (Castle Easton) Ltd [2019] EWHC 3298 (Ch); [2020] B.C.C. 111.

Although the case is not reported, the ICC Judge’s validation of the administrators’ prior extension should bring some comfort to Insolvency Practitioners in relation to this established practice.

Ololade was instructed by Imran Aslam and Zoe Stewart of Armstrong Teasdale LLP.

Ololade’s note can be downloaded here.