Another instance where the initial thoughts that the Court has finally pronounced on a key were dashed by a reading of the judgement was in Kayley Vending Ltd. The Court had made an Administration Order in a case involving a pre-pack sale at arm’s length and was then subsequently invited to make an order approving the administrator’s pre-appointment costs. It did so, but using its discretionary power under paragraph 13 of Schedule B1 rather than rule 2.67(1)(c), and so failed to provide any guidance for pre-appointment costs in out of Court appointments.
The Court did indicate that “it was appropriate in the exercise of this discretion to make the order sought where the court is satisfied that the balance of benefit arising from the incurring of pre-appointment costs is in favour of the creditors rather than (in a pre-pack case) the management as potential purchasers of the business.” Reading between the lines, be careful if you apply to Court for approval of your pre-appointment costs where it is a pre-pack back to the directors without proper exposure to the market. The Court did, however, seem to approve the approach set out in Dear IP, which may or may not be useful when arguing whether you are entitled to pre-appointment costs on a particular case with your regulator!
The other matter considered by the Court was what information it should consider when deciding whether or not to “endorse” a pre-pack by making an Administration Order. In doing so it endorsed SIP 16 by concluding that whilst the “... information may not be limited to the matters identified in SIP 16 ...”, in most cases just the information required by SIP 16, “... insofar as known or ascertainable at the date of application ...” would be sufficient.
