Four colourful alarm clocks isolated on white background 3D

We are all familiar with the court’s power to make retrospective administration orders, what is often termed a ‘G-Tech Order‘ after the seminal case *. It was, however, unclear whether this principle would also carry into the sphere of receivership appointments.  A judgment** recently handed down in the Northern Irish courts suggests that indeed it does.

The case of Bank of Ireland v Edeneast Ltd**  centred on the scope of (the Northern Ireland equivalent of)  the Insolvency Act 1986 (section 35).  This section provides that a receiver may apply to the court for directions in relation to any particular matter arising in connection with the performance of the functions of the receiver.  On such an application, the court may give such directions as it thinks fit.

The facts

The ‘receiver’ was appointed as receiver and manager in May 2010 but that his authority to act as such was expressed to expire on 1 March 2011.  Unfortunately, this limitation was not appreciated until some two years after the expiry date.  During this period of time, the receiver had purported to continue acting as receiver and manager of certain licensed premises.

Bank of Ireland, being the original appointor, applied for an order under section 35 seeking to continue and extend the receiver’s appointment past 1 March 2011.  The court granted the order sought, demonstrating that it had the power to make a retrospective appointment of a receiver.

It appears as if a balancing exercise was undertaken by the court to assess the merits and dangers of granting the relief sought – the deciding factor being that there was no apparent lack of prejudice in granting the order.  It was also relevant that the issue appeared to be an oversight rather than active negligence by the interested parties.

Summary

Whilst a judgment in the local courts would clarify the position in relation to receivers improperly appointed in England & Wales, we recommend that caution is exercised as this kind of relief will not be a panacea for all invalid or expired appointments.  More often than not, the debtor may be able to demonstrate that a retrospective appointment would prejudice itself, or others, to defeat the application.

Retrospective administration appointments have been viewed from many quarters with a degree of scepticism and an arched eyebrow.  We believe that this approach should arguably be applied to retrospective receivership appointments also.

This post was edited by Aneesh Prasad. For more information, email blogs@gateleyuk.com.

* G-Tech Construction Limited [2007] BPIR 1275

** Bank of Ireland v Edeneast Limited [2013] NIQB 95


Leave a Reply

Your email address will not be published. Required fields are marked *

twenty − 18 =

This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.