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Is an Out-of-Hours Administrator Appointment Valid? Nobody knows

In Woodside and Ratten v Keyworker Homes (North West) Ltd, the High Court considered a directors’ appointment of administrators, which was made outside court opening hours. The case was caused by the uncertain and contradictory law that surrounds out-of-hours appointments.

The directors of the Keyworker Homes (North West) Ltd (the Company) electronically filed at court a Notice of Appointment (NOA) to appoint Jeremy Woodside and Christopher Ratten as administrators of the Company. The NOA was filed at 6.00pm on 24 October 2019 (out-of-hours), which was accepted by a court clerk at the same time. However, the NOA endorsed by the court stated that it had been filed on 25 October 2019 at 10.00am (after the court opened).

The administrators were concerned about the validity of their appointment having e-filed the NOA out-of-hours and applied to the court for a declaration that their appointment was valid. The application raised a question as to the correct meaning of paragraph 8.1 of the Insolvency Practice Direction (Para. 8.1) and whether it should or does preclude the company or its directors from filing NOAs outside the court’s usual opening hours by using the e-filing system which is available 24 hours a day.

Amongst other findings, the court held that a company or its directors can use the e-filing system to appoint an administrator outside court hours and that such appointments take effect at the time the filing was made, not at the time the court subsequently endorsed on the NOA. Further, the court considered that there was a “clear mistake” in the wording of Para. 8.1 and that its intended purpose was in fact to apply only to prevent qualifying floating charge holders from using the e-filing system for out-of-hours administrator appointments.

Despite the court’s decision, significant caution should be taken when seeking to rely on this case, as the court’s interpretation of the relevant law will likely be called into question. The decision goes against certain recent authorities and judicial commentary on this issue and appears to rewrite Para. 8.1. Therefore, although applicants may use this case when seeking a declaration that their out-of-hours appointment is valid, they would be wise not to rely on it. Unfortunately, this area of law will likely remain uncertain until the relevant legislation is amended. Until then, practitioners should, where possible, make appointments when the court is open, so to avoid uncertainty as to their validity.

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