In our post on 23 February 2011 we reminded you about the need to give notice of intention to appoint to the company in all administrations, irrespective of whether there is a floating chargeholder, where the appointment is being made by the directors, quoting an unreported case where the appointment of the administrator was upheld, but he was made personally liable for the costs of the action. We have just been made aware of a further case on this very issue which makes for some very scary reading. The Chancellor of the Companies Court found that because notice of intention to appoint had not been given to the company then the appointment of the administrator was invalid. Leave to appeal has been granted, but it is not clear at this stage whether or not an appeal will be made.
It is highly likely that this case will be reported, so watch out for more details on it, but in the meantime this case really brings home the need to either ensure that you give notice of intention to appoint to the company where the appointment is being made by the directors, or arrange for the appointment to be effected by a special resolution of the company.
