5th Mar 2024

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Nicholas Leah (instructed by The Wilkes Partnership LLP) for the Fourth Respondent


HH Judge Klein:

This is my decision following the hearing of a preliminary issue, ordered by HH Judge Saffman on 13 October 2023, in an application by the Applicants, which they made on 18 August 2023, for “an order pursuant to IR rr.18.24 & 18.28 increasing the amount of the Applicants’ remuneration as the Joint Administrators” of The Good Box Co Labs Ltd (“the company”) (“the application”). The preliminary issue was expressed by the Judge to be “whether the Applicants are entitled to apply for a determination of their fees”. Since a hearing before me on 14 December 2023, that preliminary issue has been referred to as “the Standing Issue”. At the same hearing, as an order I made then recites, the parties then represented (the Applicants and the company) did not dispute that the Standing Issue (and so the preliminary issue ordered) requires the resolution only of the following question: whether the Applicants have standing to make an application under rules 18.24 and 18.28 of the Insolvency (England and Wales) Rules 2016 (“IR2016”) even though, at the time they made the application in August 2023 and since then, they were not, and have not been, office-holders in relation to the company (“the Standing Issue Question”). For reasons that do not matter now, the determination of the Standing Issue had to be adjourned to the hearing to which this judgment relates (“the hearing”), and I gave directions, including in relation to the joinder of the Second, Third and Fourth Respondents to the application. At the hearing, all the represented parties (the Second and Third Respondents having elected not to participate) proceeded on the basis that the Standing Issue Question was the question which needs to be answered to determine the preliminary issue. This judgment sets out my answer to that question.

Background

The company was placed in administration on 28 June 2022 and the Applicants were appointed administers. On 16 January 2023, HH Judge Davis-White KC sanctioned a restructuring plan in respect of the company under section 901F(1) of the Companies Act 2006. By the Judge’s order the Applicants’ appointment as administrators ceased to have effect, in the circumstances which have happened, on 26 January 2023.

The administration appears to have been contentious, as apparently was the settling of the restructuring plan and as the application has been.

Although it is disputed by the company and the Fourth Respondent (“NGI”), which had proposed the restructuring plan, the Applicants contend, and the application has proceeded on the basis, that the company’s creditors fixed the Applicants’ remuneration on 30 December 2022 by a decision procedure by which the following resolution was approved:

“That the Joint Administrators’ fees be charged by reference to the time properly spent by them and their staff in dealing with the matters relating the to the Administration, such time to be charged at the hourly charge out rate of the grade of staff undertaking work at the time the work is undertaken. Fees on account of these costs to be approved at £235,000 plus VAT” (“the resolution”).

There was a dispute about the Applicants’ remuneration as administrators at the time the restructuring plan was being proposed (as can be discerned from the recitals to Judge Davis-White’s order to which I am about to refer). In any event, clause 8.3 of the restructuring plan (“clause 8.3”) has provided as follows:

“Any unpaid fees or expenses of the Administrators approved by the Administration Creditors Committee as at the Restructuring Plan Effective Date will be paid by the company within 14 days of the Restructuring Plan Effective Date. Any other fees or expenses claimed by the Administrators will be subject to the Adjudication Process and in the absence of agreement with the Plan Administrators the Administrators shall be at liberty to apply to Court for approval in accordance with [IR2016].”

The restructuring plan also contains a complex claims adjudication process in clause 10.2 (“the adjudication process”), which, amongst other matters, contains short limitation periods for debt claims covered by the adjudication process to be brought against the company.

There was clearly an issue at the hearing before Judge Davis-White about the inter-relation of clause 8.3 with the adjudication process, because the Judge’s order recites:

“AND UPON the Court noting that neither clause 8.3 nor clause 10 of the Restructuring Plan interferes with any valid decision made before the Restructuring Plan Effective Date (as defined in the Restructuring Plan) fixing the basis of the Joint Administrators’ remuneration in accordance with the Insolvency (England and Wales) Rules 2016, but that it is initially a matter for adjudication by the Plan Administrators in accordance with clause 10 whether any such valid decision has been made

AND UPON the Court taking the view that, whilst clause 10.2 of the Restructuring Plan is not expressed to be subject to the rights of the Joint Administrators set out in clause 8.3 of the Restructuring Plan, that is clearly the intended effect of clauses 10.2 and 8.3 of the Restructuring Plan

AND UPON [NGI] and the company (acting by the Joint Administrators) consenting to an amendment of the Restructuring Plan such that clause 10.2 shall begin with the rider: “Subject always to the rights of the Administrators set out in clause 8.3 of this Restructuring Plan” so as to reflect the intended effect of clauses 10.2 and 8.3

AND UPON the Court taking the view that such amendment will cause no prejudice to stakeholders of the Company, as the amendment merely reflects the clear intended effect of clauses 10.2 and 8.3 of the Restructuring Plan”.

The final version of the restructuring plan does contain the additional words, in clause 10.2, which were recited as being consented to.

The Applicants made a claim for payment of remuneration, under the adjudication process, to the Second and Third Respondents (“the plan administrators”) on 6 February 2023, in the sum of £229,751.38. Of that claim, about £209,000 represents a claim for fees incurred additional to the £235,000 payment on account which was approved by the resolution. The plan administrators have not admitted the claim for the additional £209,000 and, so, the Applicants made the application.

Continue reading this Judgment here.


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