Two High Court decisions published on the same day (though handed down on different dates) have considered, respectively, the ability of a qualifying floating charge holder and an insolvent company’s directors to use the courts’ electronic filing system to file a notice of appointment of an administrator out of court hours
Both cases found categorically that it is not possible for any party to effect an administrator appointment out of court hours by using the e-filing system. However, the courts had different views as to the consequence for any appointment attempted in just this way:
- In Re Skeggs Beef, Marcus Smith J held that a qualifying floating charge holder’s (QFCH) appointment that had been made online at 5.03 pm (after the court closed at 4.30 pm) was valid, though defective. As there was no incurable substantial injustice the court declared that the appointment was valid from the time it was supposedly made.
- By contrast, in Re SJ Henderson and Re Triumph Furniture, ICC Judge Burton held that any out-of-hours appointment (though on the facts this was a purported director appointment) made using the e-filing system had no effect at all and so was not curable. However, any such filing, if accepted and endorsed by the court during that out-of-hours period, would automatically take effect at the time the court next opened (usually 10.00 am).
Taking a positive view, the common ground between these two decisions provides some certainty about the permissible timing of any administrator appointment made by e-filing. In other words, a non-problematic out-of-court appointment should be endorsed by the court with a time between 10.00 am and 4.30 pm on a weekday (depending on the opening hours of the relevant court).
Beyond this, it is still not entirely clear if an appointment made by e-filing outside these hours will need to be actively validated through a court application, or whether it will be automatically effective from 10.00 am the following working day. Either an amendment to the Practice Direction on Insolvency Proceedings (at the expense and subject to the timing of the Department of Justice) or an appellate decision (at the likely expense of unsecured creditors) will be needed to settle this. (Eason and another v Skeggs Beef Ltd  EWHC 2607 (Ch) (5 October 2019) and Edwards and another v SJ Henderson & Company Ltd  EWHC 2742 (Ch) (10 October 2019).)
Credit to Practical Law