Court of Appeal case regarding administrators
The recent case of Finnerty and another v Clark and another [2011] EWCA Civ 858 is very interesting relating to the issue of applications to remove administrators. Those in the insolvency field will already know this is discretionary for the court but is not an easy application to succeed with.
The Court of appeal reiterated that a court of first instance has wide statutory discretion and that to succeed, the applicant does not need to prove misconduct, unfitness, or a lack of integrity by the insolvency practitioner.
The Court went on to emphasise that :-
- There must be “good or sufficient ground or cause for the removal of the administrators and for their replacement by another administrator”. If the application cannot satisfy this test it should not go on to consider it’s statutory discretion.
- In the case in question, the administrators had refused to start legal proceedings to challenge the underlying security in a property transaction. Whilst that application would have been funded by individuals who had given personal guarantees and would have benefitted from a successful challenge by the administrator, the administrator was entitled to refuse to make that application.