Choice of administrator: relevant factors

In the case of Re World Class Homes Ltd, guidance was given on the factors that the court will consider relevant where the choice of administrator is in contention. The case was heard in the Chancery Division of the High Court on 4 November 2004 but has only recently been reported

The case involved a dispute between a creditor of the company (Madison Advertising) and the company itself (World Class Homes Limited) as to the choice of nominated administrator, although it was accepted by both parties that the company was unable to pay its debts and that an administration order was reasonably likely to achieve the purpose of administration.

An order was made appointing the company's choice of nominee as administrator on the basis that the company's nominee (which consisted of two individuals) had some existing acquaintance with the affairs of the company, and had already gauged interest from prospective buyers of the company's assets. The judge also considered the fact that the company's nominee had branch offices in a territory in which the company conducted some of its business as beneficial, and that the appointment of more than one nominee would confer a practical advantage to the administration.

In coming to his decision, the judge stressed the unimportance of "head-counting" the number of creditors that were in support of a particular nominee. In addition, the judge did not consider the cautious reaction of the company's nominee to requests for information from the creditor's proposed nominee as reasonable grounds for supposing that if they were appointed they would not do their job as well as any other firm. It was reasonable to be cautious and not give out information without direct authority from the company, and without having the opportunity thoroughly to vet the information requested.