Navigating the appointment minefield: watch the punctuation!
Insolvency Bitesize - October 2020
Where a company is regulated by the FCA or PRA, Section 362A of FSMA 2000 requires the consent in writing of the FCA/PRA (as applicable) to the out-of-court appointment of an administrator by the company or its directors. In Re A.R.G. (Mansfield) Ltd  EWHC 1133 (Ch), a search was made of the FCA's Financial Services register using the company's correct name “A.R.G." which indicated no consent was required. It transpired some months after the administrators were appointed, however, that this was a mistake. The FCA had incorrectly registered the company as “ARG" – a similarity its search function, perhaps surprisingly, failed to identify. Did the lack of FCA consent – when it was not thought it was required - render the appointment void or merely defective and curable?
The very same issue arose in Re M.T.B. Motors Ltd (in administration)  EWHC 3751 (Ch). It held that a failure to obtain the prior consent of the FCA (then the FSA) to the appointment rendered the appointment null and void. But, in Re Ceart Risk Services Ltd  EWHC 1178 (Ch), the High Court came to a different conclusion. It held that a consent filed on the day after the filing of a notice of intention to appoint administrators could still be said to have been filed “along with" a notice of intention to appoint or to “accompany" the notice of appointment (for the purposes of Section 362A) and that this was merely a curable defect.
The High Court noted the discrepancy in the first instance decisions. It held that it was at least arguable that there had been no power to appoint the administrators without the FCA's prior consent such that the purported appointment was a nullity. In the end, the High Court was content to make a retrospective administration order (adding to the body of case law in support of the court having such power, absent its jurisdiction to do so being challenged in the Court of Appeal).
The case highlights that when searching the FCA register make sure you include a variety of searches – for incorrect spelling, incorrect punctuation etc. Failure to do so could lead to uncertainty and additional costs should you appoint without obtaining consent and it subsequently transpires you should have got consent.