December 5, 2021

Volume XI, Number 339

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December 03, 2021

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December 02, 2021

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Temporary Insolvency Practice Direction Provides Certainty About Administration Appointments

Throughout the pandemic we have seen a succession of temporary practice directions, enabling practitioners to deal with the swearing of notices of intention (NOI) and notices of appointment (NOA) of administrators remotely, as well as answering a question which the judiciary had grappled with several times – when does a notice of intention or notice of appointment come into effect if filed outside of court hours?

The new temporary practice direction (TIPD) that came into force on 1 October largely replicates it predecessors, but unlike its predecessors that were in place for a finite period, it appears that the new temporary practice direction may be a permanent fixture –  at least until the issues addressed in the TIPD are addressed by a substantive rule change (see the introduction to the TIPD).

This is welcome news for those who may have been concerned about a return to pre-COVID cases that had to address the issue of when an NOI and NOA takes effect and whether administrators had been validly appointed.

For the foreseeable future at least, it is clear that:

  • Directors wishing to appoint administrators should file NOIs and NOAs within court hours (10am until 4pm – even in London where the Court is open longer);

  • If a director NOI or NOA is filed after 4pm it will take effect at 10am on the next business day the court is open for business; and

  • For out of hours appointments by a qualifying floating charge holder, a QFCH must follow the procedure set out in the Insolvency Rules.

However, the TIPD does not address what happens to a NOI filed by a QFCH out of hours.  Is it subject to the same treatment as a director filed NOI? Or can a QFCH file at any hour and the NOI take effect when filed – it seems the latter.

Another helpful carry over, is the (at least strong implication) that the 10 day period for the purposes of calculating the period between filing an NOI and NOA under paragraph 28(2) of Schedule B1 of the Insolvency Act starts on the day the NOI is filed.

We know from paragraph 28(2) of Schedule B1 that an NOI expires “after the period of ten business days beginning with the date on which the notice of intention to appoint is filed.” However, previous case law created some uncertainty as to when the 10-day period began.

The Court of Appeal in JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd [2017] EWCA Civ 267 found the 10 day period started the next working day after the NOI was filed, therefore excluding the filing date from the 10-day period. However, in Re Statebourne (Cryogenic) Ltd [2020] EWHC 231 (Ch), the High Court decided that the day the NOI was filed should be included within the 10-day period something also agreed by ICCJ Burton in her obiter comments in SJ Henderson & Company Limited.

The TIPD clearly states that, for NOIs filed out of hours by the directors, they are treated as delivered to Court at 10am on the next day the court is open for business and for the purposes of paragraph 28(2) the ten day period begins on that day.  It must therefore sensibly follow, that for an NOI filed within court hours that the ten day period begins on the day of filing.

What is also helpful, is the continuing ability to remote swear NOIs and NOAs.  Provided the procedure in paragraph 10 of the TIPD is followed, then there will be no defect or irregularity with the appointment as a result of the appointee making a statutory declaration by way of video conference.

The ability to remote swear was particularly helpful during the pandemic when due to social distancing restrictions, it was difficult for any face to face swears to take place and with the increased popularity of remote working and hybrid working and the fact that COVID is still a factor which could prevent in person meet ups, the ability to conduct remote swears is still valuable.

It is important to point out, however, that ability to remote swear a statutory declaration is not available for statutory declarations that are required as part of a  property transaction or a members’ voluntary liquidation.

A new addition to the temporary (or is it permanent?) TIPD is confirmation about filings made for the purposes of obtaining a A3 moratorium. The TIPD makes it clear that documents will be treated as being filed with the court at the date and time recorded in the automatic notification, as referenced in paragraph 5.3(1) PD510.

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume XI, Number 281
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About this Author

Professional Support Lawyer

Rachael Markham is the professional support lawyer providing national and global support to the Restructuring & Insolvency team.

Rachael is responsible for precedents and know-how, organising and presenting internal and external training, responding to bespoke research enquiries, drafting and editing the restructuring and insolvency blog, producing articles for journals, providing support for BD projects, marketing and pitches, and producing a weekly bulletin on technical and practical issues that affect the Restructuring & Insolvency team.

Rachael is a member of the...

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