M6.4 Administration - SA & proposals

Question 1

When must an SA be required by the administrator?

Answer 1

AS SOON AS REASONABLY PRACTICAL after appointment administrator must send notice requiring submission of a Statement of Affairs (SofA) to one or more “relevant persons”

Question 2

A How long does the required person have to provide the SA to the administrator and any person required to provide a Statement of concurrence?

Answer 2

Rules 3.28 etc..

Within 11 days of delivery (or longer if extended by administrator - or can appeal to court to extend)

Must notify any person required to submit SA that a statement of concurrence is being required. That person must also deliver the statement within the 11 days to the person providing the statement of concurrence.

Question 3

How long does any person required to provide a statement of concurrence have once SA received?

Answer 3

5 days

Question 4

Once received, how long does administrator have to deliver SA/ any statement of concurrence to CH?

Answer 4

as soon as reasonably practical

Question 5

When can nominated persons expenses in relation to an SA be paid?

Answer 5

The expenses of a nominated person which the administrator considers to have been reasonably incurred in making a statement of affairs or a statement of concurrence must be paid by the administrator as AN EXPENSE OF THE ADMINISTATION

N.B.Expenses are payable in priority to an administrator’s fees

 Administrator’s refusal to pay can be appealed to Court

Question 6

Who prepares the administrator’s proposals document?

Answer 6

The administrator (not the directors)

Question 7

What must be included in the contents of the Administrator’s proposals?

Answer 7

Including:

 How the objective will be achieved

 Which exit route from administration is anticipated (which may not be expressed in the alternative)

 If active creditor approval is not being sought, why not

Ability to apply to court for limited disclosure if
 would prejudice conduct of administration
 might reasonably be expected to lead to violence against any person

Question 8

What documents must accompany the administrator’s proposal?

Answer 8

Statement of affairs, or a summary of it; or
 If unavailable, the administrator’s explanation of the company’s financial position and of why no SofA is available

Notice re: the proposed manner of approval

Where fee approval is being sought:
 SIP9 compliance information about fees and creditors’ rights

Where sale was a “pre-pack”:
 SIP16Statement
 Where connected party disposal within 8 weeks:
 Qualifying report under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, if available

 If decision being sought–invitation to form a creditors’ committee

Question 9

When must an administrators proposals be sent to relevant parties?

Answer 9

within 8 weeks of appointment (unless extended by court or with creditors’ consent - when must notify creditors, members and CH)

Question 10

The administrator must send a copy of their proposals within 8 weeks to who?

Answer 10

 Registrar of Companies

 All members
 or alternatively, the administrator can advertise that the proposal is available

 All creditors

 proposals may be made available on a website within the same period (8 weeks or as extended by Court), but hard copy must be provided free of charge if requested

 If there has been a pre -packaged sale, to the administrator’s RPB (under SIP16)

Question 11

within what period must the initial decision date for the proposals be?

Answer 11

10 weeks (unless extended)

Question 12

If active approval of administrator’s proposals is sought, what DMPs can be used?

Answer 12

 Qualifying decision procedure
 Deemed consent procedure (not if includes remuneration proposal)

Question 13

Can an administrator’s proposals be amended?

Answer 13

Yes if QDP where modifications can be proposed.

(If deemed consent or deemed approval used then creditors would have to object leading to a. QDP)

Question 14

What is the position where a creditor objects to deemed consent?

Answer 14

Threshold for objections is a simple 10% in value of creditors

If less than 10% of creditors object to the proposed decision, it is deemed to have been made

 Otherwise creditors are treated as not having made a decision about a matter and if the decision is again sought, must be sought using QDP

 The administrator will need approval for their proposals, so will necessarily call a QDP if deemed consent is objected to

Question 15

When can an administrator’s proposal be accepted by Deemed approval?

Answer 15

 assets sufficient to pay all creditors in full
 assets not sufficient for dividend to unsecured creditors apart from prescribed part
 objectives (a) or (b) cannot be achieved (so objective c is being pursued)

Proposal deemed approved if notice and the proposals are sent
 and creditors do not request a decision to be made

Question 16

How do creditors object where Deemed approval process used?

Answer 16

10% in value of total creditors can require administrator to use a decision procedure to seek approval of the proposals

 Request must be issued within 8 BUSINESS DAYS of delivery of proposals

Where decision sought then decision date must still be within 10 week period.

If no requests for a decision are received, the proposals are deemed approved

Question 17

A When must administrator give notice to required parties once proposal approved?

B To whom must notice be given?

Answer 17

A AS SOON AS REASONABLY PRACTICAL

B CH
Court (plus copy of proposal)
Creditors (plus copy of proposals if not already sent)

Where the proposals are modified – must report on revisions

NB Where deemed approval used then no decision procedure report.

Question 18

What happens when an administrator fails to obtain approval to proposals?

Answer 18

Administrator reports to court failure to obtain approval of proposals

Court may

 adjourn hearing conditionally or unconditionally

 order cessation of appointment (and administration)

 make an interim order or winding up order on any suspended petition

 Make any other order it thinks appropriate

If no participation, administrator has power to act in own discretion

 Order may approve proposals or give administrator directions

Question 19

What happens if the administrator want so to propose substantial changes after the proposal has been approved?

Answer 19

Administrator is required to:
 send revised proposals
 seek a decision from creditors

By QDP OR deemed consent
 [NOT a Para 52 deemed approval]

 May approve with/ without modifications