Vol 14 (2017) - Issue 4

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JCAM Commercial Real Estate Property XV Limited v Davis Haulage Limited [2017] EWCA Civ 267

Introduction
In the recent decision of JCAM Commercial Real Estate Property XV Limited and Davis Haulage Limited, the Court of Appeal discussed whether it is open to a company or its directors to give a notice of intention to appoint an administrator, thereby triggering the interim moratorium for a period of up to ten business days, without a settled intention to appoint an administrator.

Legislative background: notice of intention to appoint an administrator
Schedule B1 to the Insolvency Act 1986 sets out the administration regime for corporates. Following the extensive amendments to the administration procedure introduced by the Enterprise Act 2000, an administrator may be appointed not only by court order but also out of court by the holder of a 'qualifying floating charge' ('QFC') (as defined in paragraph 14(2)), the company or the directors.
The holder of a QFC has the right to appoint an administrator in priority to the exercise of that right by the company or its directors. Accordingly, where the company or its directors propose to appoint an administrator, at least five business days’ written notice must be given to the holder of any QFC (see paragraph 26).
Where such a notice of intention to appoint is given, the company or its directors are required by paragraph 27 to file with the court, as soon as is reasonably practicable, a copy of the notice and any document accompanying it. Paragraph 28 provides that the company or its directors may not appoint an administrator without first complying with those requirements and either the period of notice of at least five business days has expired or the persons to whom the notice has been given have consented in writing to the appointment. Paragraph 28(2) further provides that an appointment of an administrator may not be made by the company
or its directors more than ten business days after filing a copy of the notice of intention to appoint administrators with the court.
One effect of the appointment of an administrator, essential to the fulfilment of the purposes of an administration, is a moratorium on alternative insolvency proceedings and other legal process for which paragraphs 40 to 43 of Schedule B1 make provision. Under paragraph 44, an interim moratorium arises as soon as a copy of the notice of intention to appoint an administrator is filed with the court under paragraph 27 and lasts until either the appointment of the administrator takes effect or the end of ten business days after the notice is filed with the court.