Notice Of Intention To Appoint Administrator Overview

Notice of intention to appoint an Administrator is in essence for the purpose of providing disclosure to secured creditors with a floating charge.

What Is The Notice Of Intention To Appoint An Administrator?

If a company is considering going into Administration, then in light of Paragraph 26 of Schedule B1 of the Insolvency Act 1986 a document known as a Notice to Appoint an Administrator can be filed in Court informing to formally put on record the company’s intention. This form may assist the rescue of the company and its trading operations by avoiding it having to close down and collapse into either Creditors Voluntary Liquidation or Compulsory Liquidation.

The form used is headed ‘Notice of intention to appoint an administrator by company or director(s)’. As the form highlights, it is signaling the intention of the insolvent company.

If the form of Administration is that of a Pre-Packaged Administration then the Notice to Appoint an Administrator can be deployed in such a case.

Grounds For Filing The Notice Of Intention To Appoint An Administrator

Upon filing the notice of intention to appoint as Administrator, a Moratorium instantly is created which lasts for ten business days. Creditors are unable to take legal action or proceedings against the company during this ten day period. This also impacts upon legal proceedings that have already been issued against the company.

Interested parties such as creditors and floating charge holders should be informed about the filing of the notice of intention to appoint an Administrator because their rights and interests are directly affected by the same.

What Is Form 2.8B?

Form 2.8B is the statutory form deployed when notifying the Courts of the company’s intention to appoint an Administrator. On the form, various information is stipulated and must be supplied. Perhaps unsurprisingly it will be necessary if a company intends to file a Notice of Intention to Appoint an Administrator that it has lined up a suitable person to act as the Administrator and for such a person to have agreed to act.

As a consequence, one of the requirements of this form is that the name of the proposed Administrator needs to be volunteered. It is still possible however if the company were to change its mind for any reason to appoint a different Insolvency Practitioner to act as the Administrator if it so wished.

The information provided on the form must be accurate as it must be supported by a Statutory Declaration in light of Paragraph 27 of Schedule B1 of the Insolvency Act 1986 must be filled out correctly and then filed with the Court.

When Is It Not Possible To File A Notice of Intention To Appoint An Administrator?

There are various situations where a notice of intention would not be acceptable which are outlined in Form 2.8B such as:

– the company must not have been in Administration within the last year;
– the company does not already have an Administrative Receiver in office; or
– the company is not subject to a Winding Up Petition which has already been presented but not yet discarded.

In order for the notice to be filed there must be either a qualifying floating charge holder or someone who is entitled to appoint an Administrative Receiver otherwise it is not permitted.

It is inevitable that company considering Administration will be insolvent and in some financial difficulty. In such an instance if the company has been served with a Winding Up Petitioner by a creditor seeking to enforce its debt, and if this petition was still live then it is no possible to file a Notice of Intention to Appoint an Administrator. It will be necessary to address the matter at the hearing of the Winding Up Petition.

There is usually a minimum of five days before filing the notice in Court as there are certain parties that the company would have to notify, ie. qualifying floating charge holders, any Supervisor of a Company Voluntary Arrangement or anyone entitled to appoint an Administrative Receiver. These days the appointment of Administrative Receivers is somewhat rare since their virtual eradication in the Enterprise Act 2002.

However, if an appointment of an Administrator is put forward that is objected to by the holder of a qualifying floating charge, such a party can if they so wish, appoint the Administrator of their choice. This occurrence is by no means the norm in the sense that usually the Directors’ proposed Administrator will be appointed but of course one can never say never.

Who Can File A Notice To Appoint An Administrator?

The parties who can file the Notice are the company or its Directors or holders of a qualifying floating charge over the assets of the company.

Can You File Further Notices Of Intention To Appoint After One Lapses?

If an Administrator is not appointed after the Moratorium has lapsed then the company can potentially apply to Court for an extension of the Moratorium. However, there have to be good reasons for this application, such as the existence of creditor pressure whilst heavily engaged in finalising a sale of the company assets to a potential purchaser.

However, it would unlikely that the Notice of Intention to appoint could be tactically and strategically deployed repeatedly. The clue here is in the wording of From 2.8B ie. ‘intention’. There must be a settled intention and remember this is supported by a Statutory Declaration. If a company were to file form after form every ten business days, then the Court would be unlikely to endorse such an approach as it would cast considerable doubt upon the notion of there being a settled intention to appoint anyone.

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Disclaimer: Notice Of Intention To Appoint An Administrator

This page: Notice Of Intention To Appoint An Administrator is not legal advice and should not be relied upon as such. This article Notice Of Intention To Appoint An Administrator is provided for information purposes only. You can contact us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.