Angel Group Limited and Others
The Angel Group consisted of eight companies, all of which had been placed into administration by a mixture of floating chargeholder’s appointment, director’s appointment and Court Order.
After the main assets of each had been realised the director (whose conduct was being investigated by the administrators) raised allegations about the conduct of the administrators, their firm and the appointing bank, the Bank of Scotland.
It was accepted that these allegations – on both sides – needed to be considered independently and it was agreed that new insolvency practitioners should be appointed to take on these tasks.
However, the court did not have power to appoint anyone other than the existing administrators as liquidators (s 140 IA 1986) so a scheme was devised for the court upon application to appoint the proposed liquidators initially as additional administrators and then as liquidators with the original administrators being discharged.
Further applications were made, citing the wide powers of the court under s 168 (3) to give directions and inherent jurisdiction, for the court to sanction a Memorandum of Understanding under which each liquidator would agree upon his roles and responsibilities in order to maximise efficiencies and eliminate waste of costs and potential conflicts of interests.
On the question of whether there were grounds for refusing the outgoing administrators an immediate discharge, the court considered the usual practice under paragraph 98 for an immediate discharge as the officeholder no longer has control of the company’s assets (although paragraph 98(2) c does allow for the court to set a later date). The court considered that there were adequate powers available to the incoming liquidators to investigate the administrators actions under paragraph 75 (misfeasance) and call them to account if wrong-doing were found.
For further information contact Nigel Cook on 01306 502294 or firstname.lastname@example.org.