Can Directors File An Out Of Hours Administration Appointment?

With the introduction of electronic filing which allows parties to file documents at court 24/7 we consider the recent case of Wright v HMV Ecommerce Limited (2019) in which the court was asked to confirm whether administrators were validly appointed following the directors filing a notice of appointment after the court office was closed.

The Electronic Working Pilot Scheme ("EWP") Practice Direction came into effect in 2015, initially in the London region. It now applies in all Business and Property Courts in England and Wales from 30 April 2019.

Electronic filing enables parties to issue proceedings and file documents online 24 hours a day, every day, all year round, including out of normal court office opening hours, and on weekends and Bank Holidays. The question considered in the HMV case was whether the appointment of administrators by directors out of hours using electronic filing was valid.

Why is there confusion?

Under the Insolvency Rules 2016 ("Rules") only a qualifying floating charge holder has power to appoint an administrator out of hours. Electronic filing is however 24/7 and can be used to issue insolvency proceedings. The EWP practice direction sets out some exceptions to this. In particular, paragraph 2.1(c) states that where a filing is of a notice of appointment of an administrator by a qualifying floating charge holder, and the court is closed, the filing must be in accordance with Rule 3.20 which requires the appointment to made by fax or email.

Paragraph 8.1 of the Practice Direction - Insolvency Proceedings ("PDIP") also deals with electronic filing.

The PDIP says, notwithstanding the restriction in the EWP to notices of appointment made by qualifying floating charge holders, paragraph 2.1 of the EWP shall not apply to any filing of a notice of appointment of an administrator outside court opening hours, and Rules 3.20 to 3.22 of the Rules shall continue to apply. Rules 3.20 to 3.22 of the Rules set out the process for out of hours appointments by qualifying floating charge holders only.

Some have interpreted paragraph 8.1 of the PDIP to mean that electronic filing cannot be used to make any out of hours appointments full stop, others read it to mean that the restriction only applies to qualifying floating charge holders and, as such, directors can file a notice of appointment outside of court hours.

What did the court say?

The clear ambiguity between the EWP practice direction and the PDIP was brought into sharp...

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