■that the charge is a qualifying charge, i.e. the charge
(or charges) are over the whole or substantially the
whole of the company’s property;
■the charge is enforceable at the date of the appointment;
■the company must not have a provisional liquidator
in office;
■there must not be an administrative receiver in office.
Comment.The court has power to appoint a provi-
sional liquidator at any time after the presentation of a
petition for compulsory winding-up of the company, e.g.
to safeguard the company’s property until a liquidator is
appointed.
Method of appointment
Given that an insolvency practitioner is willing to act
as administrator, the person making the appointment
must give two business days’ notice to holders of any
qualifying floating charge operating in priority to his or
her own stating the intention to appoint an administra-
tor. Notice to appoint an administrator is filed at court
together with a statutory declaration confirming that
the appointor holds an enforceable floating charge. This
is accompanied by a statement from the administrator
consenting to the appointment and stating that in his or
her opinion the particular purpose of the administration
is reasonably likely to be achieved. When this is done the
appointment commences.
2 By the company or its directors
A company or its directors will only be able to appoint
an administrator if:
■the company has notbeen in administration on the
instigation of the company or its directors in the pre-
vious 12 months;
■the company has notbeen subject to a moratorium in
regard to a failed company voluntary arrangement in
the previous 12 months;
■the company is or is likelyto become unable to pay its
debts;
■the company is notthe subject of a winding-up peti-
tion or in liquidation;
■there is not an administrator or administrative re-
ceiver in office.
The procedure then depends upon whether
there is or is not a floating charge holder
Where there is nota floating charge holder.Notice of
the appointment of the administrator is filed with the
court with a statutory declaration and statement from
the administrator consenting to the appointment. The
moratorium takes effect at this point. Under Sch B1 this
means that an effective resolution cannot be passed or
an order made to wind up the company. There are some
exceptions, e.g. where an order for compulsory winding-
up is made on a petition by the Financial Services Author-
ity in regard to an organisation authorised for investment
business. Also no steps to enforce their rights may be
taken by creditors without the consent of the adminis-
trator or permission of the court.
Where there isa floating charge holder.Here a statut-
ory declaration is filed with the court with a notice but
only of an intention to appoint an administrator. This
notice of intent is sent to all floating charge holders. The
moratorium takes effect at this point. The two possibilities
are then as follows:
1 The floating charge holder is content with the appoint-
ment. Consent of the floating charge holder is ascertained
in two ways as follows:
■he or she responds within five days saying that he or
she is content with the appointment; or
■he or she does not respond within five days in which
case agreement is implied.
Notice of the appointment is then filed in court with
a statement from the administrator consenting to the
appointment and stating that in his or her opinion the
purpose of the administration is likely to be achieved.
The administrator is then in office.
2 The floating charge holder is not content with the ap-
pointment. Such a holder can appoint an administrator
of his choice to act in the administration. Having identi-
fied an alternative administrator the charge holder must
give two business days’ notice to holders of qualifying float-
ing charges with priority over his own charge (if any)
stating his intention to appoint. The notice to appoint is
filed in court with a statutory declaration confirming that
he or she holds an enforceable qualifying floating charge.
This is accompanied by a statement from the admin-
istrator consenting to the appointment and stating that
in his or her opinion the purpose of the administration
is likely to be achieved. The administrator is then in office.Effect of appointment of an
administrator: generally
The following are the main effects of the appointment of
an administrator by any of the available means.Part 2Business organisations