Appointment of administrators outside court opening times

Insolvency Bitesize - September 2019

In Re HMV Ecommerce Ltd [2019] EWHC 9(Ch), the directors purported to appoint administrators out-of-court by e-filing the appointment documents at court at 5.54pm on December 28th. The Court’s decision on the validity of the appointment is welcome – but it did not address the underlying problem.

Unlike QFC holders, the IR 2016 do not give the company or its directors an express right to appoint administrators out-of-court when the court is shut (it shuts at 4.30pm). While e-filing at court is available 24/7, the E-Filing Practice Direction and Insolvency Practice Direction raise serious doubts as to its use for administration appointments outside court hours.

In the HMV case, the parties had seemingly overlooked the interplay of the E-Filing and Insolvency Practice Directions. So, a month after the appointment, the administrators came to court asking for a declaration that their appointment was valid.

The two Practice Directions (just about) clarify that, rather than e-filing at court, QFC holders must use the procedure provided by the IR 2016 when the court is shut - sending appointment documents to a designated e-mail/fax. But, even though the IR 2016 make no provision for company or director out-of-court appointments when the court is shut (whether by e-mail, fax, e-filing or otherwise), the drafting of the Insolvency Practice Direction is so opaque that it could be read as saying that e-filing is in fact available for company and director appointments when the court is shut.

In the end, the High Court declared that the administrators’ acts were valid despite any defect (under Paragraph 104 of Schedule B1), that it would waive any purported defect (under Rule 12.64) and that it would extend the time for filing (under its CPR powers). This is arguably the right result, although making a retrospective court administration appointment order may have been an alternative route (and it’s certainly questionable if the court’s CPR power to extend compliance with time limits can really extend to treating the court as open when it is not).

But, the decision does not address the central issue – can the company or directors e-file appointment documents outside of court opening hours? Our view is – don’t risk it. At best, you will expose any appointment to uncertainty and at worst you will have an invalid appointment.