Want to remove an Administrator?
What Is An Administrator?
Sometimes a company’s creditors might have interests that they consider are not being furthered by a particular Administrator. In such circumstances, they might seek to remove or replace the Administrator.
How To Remove an Administrator is not always a simple procedure or popular one either. However, if creditors are unhappy with the Administrator (or any other office-holder) it is open to them to remove him or her from office.
Are you a dissatisfied creditor of a company in Administration or some other insolvency process, seeking to consider how to replace or remove an Administrator and to have someone else take over for the creditors?
The Insolvency Act 1986 sets out the requirements for the Removal of an Administrator. Paragraph 97 of Schedule B1 of the Insolvency Act 1986 sets out the position.
How To Remove Or Replace An Administrator
Removal of an Administrator can be effected in the following ways:
It is the duty of an Administrator to be efficient, vigorous and unbiased and if the Administrator does not live up to this standard, then the court is likely to act without hesitation to remove him or her accordingly.
How To Apply To Court To Remove An Administrator
Application to Court requires what is referred to as ‘just cause’ to remove an Administrator. Remove an Administrator is not intended to be a procedure capable of being deployed by creditors if they just fancy a changing of the guard or they have fallen out with an Administrator for reasons unrelated to the Administrator’s material conduct in the administration of the insolvency estate (or Liquidation, Bankruptcy etc).
It would be very expensive if an Administrator was replaced on a routine basis. Imagine the duplication of effort alone that would be required for a new Administrator to get up to speed on what has been going on with the company. Such costs would be at the expense of all creditors.
Consequently, if creditors want to remove an Administrator then they have to have good reason. But what is good reason?
What Is A Good Reason To Remove an Administrator?
Good reason or just cause will depend upon the facts of the case to remove an Administrator. The burden will be on the creditor applicant to show why an Administrator (or other Office-Holder) ought to be removed.
In general terms, the Court will expect that the Administrator to have been efficient, vigorous and unbiased; if not the Court may exercise its discretion to grant removal. However, an effective and honest Administrator will usually not be removed. Misconduct itself is not a prerequisite for an application for removal to succeed.
An example of how the Court viewed “vigour” in a particular case, can be seen in the matter of Re Keypak Homecare Ltd  BCLC 409 where Millett J said:
“If the liquidation had been conducted with any vigour at all, long before now the liquidator would be in a position either to allay the suspicions of the creditors or to lay papers before solicitors with a view to starting proceedings. Such proceedings might well include an application for the appointment of a receiver of Northern Brass Ltd. It need hardly be said that any such proceedings have to be conducted with great speed. Stock which has disappeared from one company is very likely to disappear from another under the same control.”
“There is nothing that can be said against Mr Edgar so far as his personal integrity is concerned. There is no evidence of any misconduct or wrongdoing on his part, or of his intimacy or friendship with the directors of the company at all. He is a professional, independent, and experienced liquidator. But I am not impressed by his performance in the conduct of this liquidation. I take the view that his experience, gained in times when liquidators were accustomed to directors simply removing the stock before liquidation and then paying for them afterwards at forced sale values, has stood him in ill stead. As a result, he has adopted a relaxed and complacent attitude to such conduct, and in my judgment the creditors, who were outraged by what they believed had happened, were perfectly reasonable in the view that Mr Edgar was not likely to pursue the directors with anything like sufficient vigour. If that was the view they adopted at the meeting, then it has been amply confirmed by all that has taken place since. I, too, take the view that Mr Edgar is unlikely to pursue the directors with anything like sufficient vigour.”
“In circumstances such as the present, the creditors are entitled to expect either the suspicious matters to be cleared up very shortly after the creditors’ meeting, or proceedings to be commenced against the former directors with speed and pursued with vigour. A liquidator who can see from the statement of affairs that there are likely to be insufficient assets to enable him to discharge his duties ought to make the position clear at the meeting of creditors and insist on being authorised by those present at the meeting to take such steps as may be necessary. But simply to stand back and do nothing and then claim that that is justified by the lack of finance is not, in my judgment, good enough.”
How To Requisition A Decision To Remove an Administrator
Requisitioning a Decision Procedure can be undertaken from compliance with Rule 15.18 of the Insolvency (England and Wales) Rules 2016. The key threshold to overcome is having 25% of creditors by value supporting your proposed resolution of creditors to remove an Administrator and to replace them with a person who has consented to act.
This procedure may well involve the need to pay a deposit as security for the costs of convening the procedure by virtue of Rule 15.19 of the Insolvency (England and Wales) Rules 2016. To require a deposit the Administrator will need to set out (within 14 days of the request to requisition the procedure), details of how the sum requested for the deposit is broken down.
So to remove an Administrator by creditors could be a phone call away or it could be a long way away; it could be unmerited and simply not happen at all. If you are a dissatisfied creditor do not suffer in silence if you have real and merited concerns, get in touch and Our CEO Elliot Green will consider the matter for you and give you the benefit of his view.
If you would like to explore your options in a case relevant to you then you can contact Our CEO Elliot Green by emailing him at email@example.com or call us to speak to him on 020 3925 3613.
He will give you the time of day but this does not mean the other practitioner or an Administrator should or indeed will be removed. The facts of each case need to be very carefully considered and there is no presumption one way or the other.
Someone’s concerns and suspicions can sometimes takeover and objectivity can on occasion be lost. An Insolvency Practitioner is in effect a servant of the creditors, not their ‘hired gun‘ as a court has been known to promulgate as Mr Justice Lightman did in Ng v Ng (1998) 2 2 FLR 386, (1997) BCC 507:
“A trustee in bankruptcy is not vested with the powers and privileges of his office so as to able him to accept engagement as a hired gun.”
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Disclaimer: How To Remove An Administrator
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