The court rejected the allegations of breach of duty in their entirety. The detailed judgment is useful in summarising the scope of administrators’ duties following the decision in the 2018 Davey v Money case. Although this judgment is fact-specific, it demonstrates that administrators can reasonably rely on advice from competent professional agents and consultants.
The court found that the administrators had properly and genuinely considered the purpose of the administration, reasonably concluding that the first objective of administration – rescuing the company as a going concern – was unlikely to be achieved. However, they did not completely disregard that this objective could be achieved if an investor was found to refinance the debt.
The administrators were entitled to pursue the third objective – that is, realising property in order to make a distribution to one or more secured or preferential creditors following a discussion as to where the value of the site was likely to break. The decision as to which objective is reasonably and practicably achievable is a matter for the judgement of the administrators.
Throughout the administration, the administrators were found to have had due regard to the interests of all creditors, and not just the syndicate of lenders that had appointed them, in light of the advice they had received from their professional advisers. The administrators had no reason to doubt the validity of the professional advice they had been given, and there was no conflict of interest that prevented the administrators from appointing the same property agents as had previously advised the syndicate of lenders. The administrators had given due consideration to the advice received in relation to planning, marketing and sales matters from their advisers. In the circumstances, it was reasonable for them to take account of their professional advisers and not to seek amended planning permission for the site, instead leaving interested purchasers to consider the position with their own expert advisers.
The route that the administrators chose to conduct the marketing and bidding process at the site to understand what value the site would reach in the market was reasonable in the circumstances, according to the court. A properly conducted marketing process and a fair and appropriate bidding process was a reasonable method by which to determine the market value of the site, rather than obtaining an independent valuation. The court found that the administrators had taken reasonable steps at every stage in the sale and marketing process to ensure that the site was sold for the highest price reasonably obtainable in the circumstances. As such, it had not been sold at an undervalue.
Use of remote proceedings
The judgment also considers the use of remote trials. The judge noted that he did not feel disadvantaged in his ability to assess the reliability or credibility of witnesses by hearing witness evidence remotely. It was also noted that the remote hearing allowed greater public access than if it had been heard in a traditional courtroom.
Co-written by Yazmin Russ of Pinsent Masons.