Jurisdiction(s):
United Kingdom

Re Pindar Scarborough Ltd: paid-up secured creditors are not ‘secured creditors’; their consent is unnecessary for administration decisions and extensions (England and Wales)

Published on: 04 June 2024

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Re Pindar Scarborough Ltd (in administration) [2024] EWHC 908 (Ch), [2024] All ER (D) 72 (May)

What are the practical implications of this case?

The First Review records the government’s long-held view that a creditor’s status is fixed at the commencement of the process and continues even where full repayment is later achieved, and noted an intention to amend IR 2016, SI 2016/1024, r 15.11(1) to make that position explicit. If that had accurately reflected the law, numerous administration steps dependent on secured creditor consent would have become far harder to manage—most notably, approval of fees and extensions. After a secured creditor is paid in full during an administration, there is little incentive for them to remain involved or to engage meaningfully with the administrators, as they have no financial stake. An administrator seeking to extend an administration out of court under paragraph 76 of Schedule B1 to the Insolvency Act 1986 might have found that by reason of...

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