FREE CHAPTER from ‘A Practical Guide to Contested Administration Applications for Insolvency Professionals’ by Simon Passfield KC & Govinder Chambay


As indicated in the previous chapter, applications for an administration order are less common nowadays because the administration regime in Schedule B1 gives directors, a company and a QFCH the ability to appoint an administrator out of court. Where that route is available, it will ordinarily be more attractive because it is quicker and cheaper.[1]

However, as we consider below, there are a number of circumstances where it may nevertheless be necessary or desirable for the company or its directors or a QFCH to apply formally for an administration order. Moreover, a creditor who does not fit into one of those categories may only obtain an administration order through the courts.

(a) Applications by the company or its directors

Where the directors of a company conclude that a company is insolvent and that an insolvent administration or liquidation is unavoidable, they must treat the interests of the company’s creditors as paramount and take every reasonable step to minimise their potential losses. If not, they risk potential claims for breach of fiduciary duty and wrongful trading.[2] In the circumstances, they will need to give anxious consideration to the most appropriate insolvency regime and, in particular, whether administration is likely to result in the best return for the company’s creditors.

If the directors conclude that administration is more appropriate, they will have ten business days from the filing of a notice of intention to appoint administrators to appoint an administrator out of court.[3] In some cases, there are practical difficulties which prevent an appointment from being made within this period. In such a case, it is possible for the company/directors to file a fresh notice of intention[4] (assuming that the circumstances are not so urgent that there is sufficient time to wait for the period of notice to expire before making the appointment) but they must have a settled and unconditional intention to make the appointment[5] and there is therefore a risk of the fresh notice (and/or any subsequent notices) being challenged as an abuse of process. In the circumstances, the prudent course may be to make an administration application.

Moreover, an administrator cannot be appointed out of court by either a company or its directors when a winding up petition has been presented against the company but has not been disposed of.[6]

Thus, in many cases, seeking an administration order will be a reaction to the presentation of a winding up petition. The interim moratorium under paragraph 44 means that whilst an administration application has been made but has not yet been disposed of the court will not make a winding up order.[7]

The desire by the directors to place the company into administration and avoid a liquidation may boil down to a number of factors; it might be thought that the company is capable of being rescued and therefore that liquidation would be a step too far.

There are other considerations as well – void dispositions[8] do not apply in administration; directors may be concerned to prevent the unravelling of any transactions post-presentation of the petition if it is thought that there are no grounds to obtain a validation order.

Where a winding up petition is extant, it may be that directors turn to a QFCH who, unlike directors or the company, is still capable of exercising their power of appointment under paragraph 14.[9] However, an administration application will be required if in fact the QFCH is unwilling to exercise its power to appoint; they may privately have concerns about the enforceability of their security which commercially they may not wish to reveal (or alert others to by making an application instead of using the out of court process) and they may simply not wish to spend money in making an application if there are others who will do the job of placing the company into administration for them.

There is also the wider question of why administration is preferred over a liquidation. As mentioned, it may be that the company or its directors have identified that there is a real prospect of rescuing the company as a going concern which the making of an administration order would facilitate.

(b) Applications by a QFCH

A QFCH may only appoint an administrator out of court of their charge is a ‘qualifying’ one for the purposes of paragraph 14 and is enforceable. A QFCH who is concerned about whether their charge is enforceable may decide to apply for an administration order instead, because, that way, there is no argument later on about whether the appointment was valid or costly litigation in seeking to rectify the position should it transpire that there were defects in the administrator’s appointment.[10]

(c) Applications by creditors

As indicated above, a creditor who is not a QFCH cannot appoint an administrator out of court and must therefore make an administration application.

It is comparatively rare for a threatened administration application to be used as a means of exerting commercial pressure on a debtor company, winding up proceedings being a more obvious tool for this purpose. Rather, the advantage of an administration application is that it is often the most effective means of bringing an insolvent company before the court quickly: given the time periods for advertisement in r.7.10 of the Insolvency (England and Wales) Rules 2016 (“IR”), a winding up petition will normally be listed for a first hearing in the general winding up list at least six weeks after it is presented; in contrast, depending on the circumstances, it may be possible to have an administration application heard in the Interim Applications List within a matter of days. This will be particularly advantageous in a case where the creditor has concerns about the way in which the company is being managed by the directors and the risk of increased trading losses or dissipation of assets.

There are also tactical reasons – a creditor who has in mind a particular appointee may prefer to place the company into administration and have their nominated candidate appointed to obtain a sense of control and direction over the administration. Whilst any such feeling is illusory since administrators are officers of the court[11] and must act independently, to the lay creditor, it is likely to be an important factor.


[1]    Sealy & Milman: Annotated Guide to the Insolvency Legislation 26th Ed. 2023 (Schedules) Schedule B1 Administration (General Note to Paragraph 10 of Schedule B1 of the Insolvency Act 1986).

[2]    BTI 2014 LLC v Sequana SA & Ors [2022] UKSC 25 [2022] 3 WLR 709; Insolvency Act 1986, s.214.

[3]    Insolvency Act 1986, Sch.B1, para.28(2).

[4]    Re Cornercare Ltd [2010] EWHC 893 (Ch); [2010] BCC 592.

[5]    JCAM Commercial Real Estate Property XV v Davis Haulage Ltd [2017] EWCA Civ 267; [2018] 1 WLR 24.

[6]    Insolvency Act 1986, Sch.B1, para.25(a). Likewise, if an administration application has been made and has not been disposed of or if an administrative receiver of the company has been appointed. Under these circumstances an administrator may only be appointed via a court order.

[7]    Insolvency Act 1986, Sch.B1, paras.42, 43 and 44.

[8]    Insolvency Act 1986, s.127.

[9]    See Insolvency Act 1986, Sch.B1, para.14 which is not fettered in this respect in the same way as paragraph 22.

[10]   Lightman & Moss on The Law of Administrators and Receivers of Companies (6th ed) at 6-024.

[11]   Insolvency Act 1986, Sch.B1, para.5.