Director’s application to appoint further directors and take other steps while the company remained in administration

The administrators now believed that they had realised sufficient assets to pay all creditors in full, subject to receiving and determining proofs of debt.

The applicant was the sole director and a shareholder who wished to prepare the Company for its hand over from the administrators to management by appointing another three directors as required by the articles, opening a bank account, rectifying the share register and managing the Company’s assets to the extent that the administrators were not able or willing to do so. The administrators opposed the application as the steps were not necessary to achieve the purpose of administration; would involve expenditure and/or liabilities (the applicant had made a request for an open ended indemnity) that could prejudice shareholders and creditors; the steps were not adequately particularised; to the extent that they were then they were outside the administrators’ remit; and there was no urgency.

The court observed that it is for the administrators to manage the Company in accordance with the approved proposals and the purposes of the administration bearing in mind their duty to act in the interests of all the creditors. The administrators’ decision not to accede to the applicant’s requests could only be challenged if the administrators are acting or have acted “so as unfairly to harm the interests” of the members or creditors. There was insufficient evidence that was the case and so the application was rejected but the court observed that it will be necessary for that position to be reviewed by the administrators to achieve the objective of leaving the company in a rescued, going concern position.

In the matter of ASA Resource Group PLC (in administration) [2020] EWHC 1370 (Ch)