Vol 18 (2021) - Issue 4

Article preview

Hat & Mitre PLC: Still in Administration (Despite Efforts from Majority Shareholders)

Synopsis
This is, in the court's own words, 'a most unusual' case, involving stakeholder standoffs, a difficult administration and procedural irregularities. The court's judgment provides welcome relief for the administrators of Hat & Mitre PLC (the 'Company') and interesting reading for those operating in the field of insolvency, holding that:
(a) the director who, as part of a directors' out-ofcourt administration application, made the statutory declaration on insolvency was entitled to take the view that the Company was insolvent, but had he not been so entitled, this would not have affected the validity of the administrators' appointment;
(b) the directors who exercised their power to appoint administrators did not do so for an improper purpose, but had they done so, this would have rendered the administrators' appointment voidable rather than void ab initio; and
(c) the administrators did not cause unfair harm to the Company's majority shareholders and that, if considering returning a balance sheet solvent company to solvency, administrators are right to:
(i) seek to ensure that any proposal for doing so will achieve the statutory objective of rescuing the company as a going concern; and (ii) consider the interests of all shareholders (including minority shareholders).