Administration Eye-Opener

Administrators’ Appointment Terminated: Reasons – Motive, Duty, Potential Conflict

Administrators’ Appointment Terminated: Reasons – Motive, Duty, Potential Conflict

A fascinating judgment sprouted in the matter of Koon v Ltd v Bowes & Ors [2019] EWHC 3455 (Ch), where Mr Justice Halliwell decided that the Administrators’ appointment should cease.

This was a case in which a company de facto Director appointed Administrators, whose Proposals were rejected by the major creditor. There appeared to be concerns as to the merit of a debenture granted in favour of the de facto Director – whether or not consideration had been provided, whether the consideration was past consideration and whether or not the future consideration related to monies advanced to enable the company to discharge its own liabilities as opposed to those arguably applicable to the de facto Director.

It was notable that Mr Koon the major creditor had offered to discharge the debenture holder’s debt in relation to consideration provided to the company after the date the debenture had been entered into. However, this was rejected by the debenture holder.

The Court seemed concerned about the position and that it appeared to the Court that the granting of a debenture in the manner done was to seek influence over the company’s property, conceivably at the expense of the major creditor using the Administration process.

Notable extracts from the judgment:

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