Part 3 – Appointment of administrator by the holder of a qualifying floating charge

Part 3 – Appointment of administrator by the holder of a qualifying floating charge

March 2013  

56.1.26 The power to appoint an administrator

The holder of a qualifying floating charge held over a company’s property may appoint an administrator without an application to court [Note 1]. In order to appoint an administrator the qualifying  floating charge must be enforceable, i.e. the charge holder must be entitled to call in their security [Note 2].


56.1.27 Qualifying floating charge

A qualifying floating charge is created by an instrument which: 

  • states that paragraph 14 of Schedule B1 of the Insolvency Act 1986 applies, and
  • allows the holder of the floating charge to appoint an administrator or an administrative receiver of the company. 

The qualifying floating charge (either itself or together with other fixed and floating charges held by the same person) must relate to the whole, or substantially the whole, of the company’s property [Note 3].


56.1.28 Restrictions on the power to appoint an administrator

An administrator may not be appointed without a court order where a provisional liquidator has been appointed or an administrative receiver is in office [Note 4] or the company is in liquidation [Note 5].


56.1.29 Prior qualifying floating charges

There may be prior floating charges where a particular floating charge was created first or there is an agreement between the holders of the floating charges that it would have priority [Note 6].


56.1.30 Appointment of an administrator where there is a prior qualifying floating charge

Where there is a prior floating charge, or charges, the applicant (see paragraph 56.1.26) must give at least two business days notice of the appointment to the holder, or holders, the charge or charges, unless the prior floating charge holder(s) has consented in writing to the making of the appointment [Note 7].  In the interim the applicant may obtain an interim moratorium on any actions being taken against the company by filing a formal notice of intention to appoint an administrator (Form 2.5B) at court. The interim moratorium expires upon the appointment of an administrator, or if no administrator is appointed, five business days after the date the notice was filed in court [Note 8].


56.1.31 The notice of appointment

Where an applicant, satisfies the criteria (see paragraphs 56.1.26 to 56.1.30) and  appoints an administrator he/she must file three copies of the notice of appointment at court (Form 2.5B). The notice must include a statutory declaration, completed not more than 5 business days before it is filed in court, that the applicant holds an enforceable floating charge and the appointment is made in accordance with Schedule B1 of the Insolvency Act 1986 (Form 2.2B). The notice must name the administrator and be accompanied by a statement by the administrator that the purpose of the administration is likely to be achieved and that he consents to act (Form 2.5B) [Note 9].


56.1.32 Urgent appointment required

Where an urgent appointment is required at a time when the court is closed a notice of appointment may be filed with the court by fax or e-mail using Form 2.7. The appointment is valid from the date of the fax or e-mail and the applicant becomes the appointer. The appointer must take copies of the notice and supporting documents into the court on the next day it is open [Note 10].


56.1.33 Sealed copies of the notice of appointment

The court will seal and endorse the three copies of the notice of appointment with the date and time of the filing. Two sealed copies of the notice will be returned to the appointer who should send one of them to the administrator [Note 11]. Where the appointer is aware of another application he shall send a copy of the sealed notice of appointment to the other applicant and to the relevant court [Note 12].


56.1.34 Commencement of appointment

The appointment of the administrator takes effect on the date and time the notice of appointment is filed in court (see paragraphs 56.1.31 and 56.1.32) [Note 13]. 


56.1.35 The administrator must publicise his/her appointment 

The administrator, for the period of the administration, must include his/her name and state that the company's affairs and property are being managed by him/her on every business document issued and on all the company's websites. The business documents include invoices, orders, letters, etc. and include those issued by, or on the behalf of, the company or administrator [Note 14].


56.1.36 Application where the company is in compulsory liquidation

Where a winding-up order has been made the holder of a qualifying floating charge must make any application for administration to the court (see Section 2 and paragraph 56.1.28). The liquidator may also make an application for administration to the court [Note 15]. Where the court makes an administration order it shall discharge the winding-up order for any such matters as may be prescribed [Note 16].  Where an application for administration is made to the court the official receiver should ensure that he/she is present or legally represented at the hearing. If an administration order is made the official receiver, or his/her representative, should obtain directions from the court on how to proceed as the winding-up order will be discharged on the making of the administration order.


[Back to Part 2 Appointment of an administrator by the court] [On to Part 4 Appointment of an administrator by the company or its directors]