CHAD GRIFFIN AND THOMAS CAMPBELL MACLENNAN AS JOINT ADMINISTRATORS OF ALEXANDER INGLIS AND SON LTD

Factual and Procedural Background

The joint administrators of Company A were appointed by the company's directors on 12 May 2021, with their term extended until 11 February 2024. They sought orders to cease their appointment as administrators immediately, discharge them from liability for their actions as administrators, wind up the company under the Insolvency Act 1986 with themselves appointed as joint liquidators, and fix their remuneration as 20% of any assets realised in the liquidation.

The administration's purpose—to achieve a better result for creditors than immediate winding up—had been fulfilled. The administrators had completed investigations, realised all known assets, including a potential claim against the company’s auditors, which had been assigned to a litigation investment company. Dividends had been paid to preferential and unsecured creditors. Notice of the intended application, including the proposed appointment as liquidators and remuneration, was given to directors and creditors, with only the floating charge holder responding in consent.

Legal Issues Presented

1. Whether it is competent to apply for a winding-up order by note rather than by petition.
2. Whether the court must appoint an interim liquidator when invoking section 140 of the Insolvency Act 1986.
3. Whether it is appropriate to approve in advance the liquidators' remuneration at 20% of the assets recovered in the liquidation.

Arguments of the Parties

Appellants' Arguments

• The court should exercise the broad powers under paragraph 79(4) of schedule B1 to the Insolvency Act 1986 to make any order, including winding up the company by note rather than petition.
• English authority supports the view that the court can wind up a company without a petition if circumstances under section 122 exist and the order relates to ending administration.
• The administrators should be appointed liquidators without the need for an interim liquidator, relying on section 140’s provisions and the absence of objections from creditors.
• Fixing remuneration at 20% of recoveries is justified due to the risk borne by the liquidators and to avoid delays and expenses of further court applications or forming a liquidation committee.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first examined the competence of applying for a winding-up order by note rather than petition. It found that paragraph 79(4) of schedule B1 to the Insolvency Act 1986 grants the court broad power to make any order, including winding up the company, provided the conditions of section 122 are met. Although rule 3.57(3) contemplates a petition, the court held that the power under paragraph 79(4) is sufficiently broad to allow winding up by note, avoiding unnecessary expense and delay.

Regarding the appointment of an interim liquidator, the court analysed the statutory framework. Unlike England and Wales, where section 140 expressly allows bypassing normal procedures, Scottish section 138 is not expressly made subject to section 140, creating ambiguity. The court interpreted section 140 as empowering it to appoint the administrators as liquidators directly, not merely as interim liquidators, to avoid unnecessary procedural burdens. This interpretation was supported by the lack of creditor objection and the relevant insolvency rules.

On the issue of fixing remuneration in advance at 20%, the court found it was not competent or appropriate to do so. The rules require remuneration claims to be made after work is done and assessed in light of all circumstances. The court noted that fixing a percentage fee in advance, especially at 20%, without detailed assessment of the work or certainty about the liquidation’s course, risks disproportionate remuneration. It also emphasized that the liquidator’s remuneration is ultimately a matter for the court’s determination and should follow established procedures rather than be pre-approved in the current note.

Holding and Implications

The court granted the first three orders sought by the joint administrators: to cease their appointment as administrators, discharge them from liability for their administration acts, and wind up the company with themselves appointed as liquidators.

The court REFUSED the order to fix the liquidators' remuneration at 20% of assets realised in advance and declined to grant leave to revisit this issue by motion within the present note. The court held that remuneration claims must follow the usual process during liquidation and be assessed on actual work done and circumstances at that time.

The direct consequence is that the administrators will transition to liquidators under the court’s order, but remuneration approval will be deferred to the appropriate stage following liquidation procedures. No new precedent was established beyond the application of existing statutory interpretation and insolvency rules to the facts of this case.