Insolvency Act 1986

[F1 REPLACING ADMINISTRATORE+W+S

Resignation of administratorE+W+S

87(1)An administrator may resign only in prescribed circumstances.

(2)Where an administrator may resign he may do so only—

(a)in the case of an administrator appointed by administration order, by notice in writing to the court,

(b)in the case of an administrator appointed under paragraph 14, by notice in writing to the [F2holder of the floating charge by virtue of which the appointment was made],

(c)in the case of an administrator appointed under paragraph 22(1), by notice in writing to the company, or

(d)in the case of an administrator appointed under paragraph 22(2), by notice in writing to the directors of the company.

Removal of administrator from officeE+W+S

88The court may by order remove an administrator from office.

Administrator ceasing to be qualifiedE+W+S

89(1)The administrator of a company shall vacate office if he ceases to be qualified to act as an insolvency practitioner in relation to the company.

(2)Where an administrator vacates office by virtue of sub-paragraph (1) he shall give notice in writing—

(a)in the case of an administrator appointed by administration order, to the court,

(b)in the case of an administrator appointed under paragraph 14, to the [F3holder of the floating charge by virtue of which the appointment was made],

(c)in the case of an administrator appointed under paragraph 22(1), to the company, or

(d)in the case of an administrator appointed under paragraph 22(2), to the directors of the company.

(3)An administrator who fails without reasonable excuse to comply with sub-paragraph (2) commits an offence.

Supplying vacancy in office of administratorE+W+S

90Paragraphs 91 to 95 apply where an administrator—

(a)dies,

(b)resigns,

(c)is removed from office under paragraph 88, or

(d)vacates office under paragraph 89.

91(1)Where the administrator was appointed by administration order, the court may replace the administrator on an application under this sub-paragraph made by—E+W+S

(a)a creditors’ committee of the company,

(b)the company,

(c)the directors of the company,

(d)one or more creditors of the company, or

(e)where more than one person was appointed to act jointly or concurrently as the administrator, any of those persons who remains in office.

(2)But an application may be made in reliance on sub-paragraph (1)(b) to (d) only where—

(a)there is no creditors’ committee of the company,

(b)the court is satisfied that the creditors’ committee or a remaining administrator is not taking reasonable steps to make a replacement, or

(c)the court is satisfied that for another reason it is right for the application to be made.

92E+W+SWhere the administrator was appointed under paragraph 14 the holder of the floating charge by virtue of which the appointment was made may replace the administrator.

93(1)Where the administrator was appointed under paragraph 22(1) by the company it may replace the administrator.E+W+S

(2)A replacement under this paragraph may be made only—

(a)with the consent of each person who is the holder of a qualifying floating charge in respect of the company’s property, or

(b)where consent is withheld, with the permission of the court.

94(1)Where the administrator was appointed under paragraph 22(2) the directors of the company may replace the administrator.E+W+S

(2)A replacement under this paragraph may be made only—

(a)with the consent of each person who is the holder of a qualifying floating charge in respect of the company’s property, or

(b)where consent is withheld, with the permission of the court.

95E+W+SThe court may replace an administrator on the application of a person listed in paragraph 91(1) if the court—

(a)is satisfied that a person who is entitled to replace the administrator under any of paragraphs 92 to 94 is not taking reasonable steps to make a replacement, or

(b)that for another reason it is right for the court to make the replacement.

Substitution of administrator: competing floating charge-holderE+W+S

96(1)This paragraph applies where an administrator of a company is appointed under paragraph 14 by the holder of a qualifying floating charge in respect of the company’s property.

(2)The holder of a prior qualifying floating charge in respect of the company’s property may apply to the court for the administrator to be replaced by an administrator nominated by the holder of the prior floating charge.

(3)One floating charge is prior to another for the purposes of this paragraph if—

(a)it was created first, or

(b)it is to be treated as having priority in accordance with an agreement to which the holder of each floating charge was party.

(4)Sub-paragraph (3) shall have effect in relation to Scotland as if the following were substituted for paragraph (a)—

“(a)it has priority of ranking in accordance with section 464(4)(b) of the Companies Act 1985 (c. 6), ".

Substitution of administrator appointed by company or directors: creditors’ [F4decision] E+W+S

97(1)This paragraph applies where—

(a)an administrator of a company is appointed by a company or directors under paragraph 22, and

(b)there is no holder of a qualifying floating charge in respect of the company’s property.

[F5(2)The administrator may be replaced by a decision of the creditors made by a qualifying decision procedure.

(3)The decision has effect only if, before the decision is made, the new administrator has consented to act in writing.]

Vacation of office: discharge from liabilityE+W+S

98(1)Where a person ceases to be the administrator of a company (whether because he vacates office by reason of resignation, death or otherwise, because he is removed from office or because his appointment ceases to have effect) he is discharged from liability in respect of any action of his as administrator.

(2)The discharge provided by sub-paragraph (1) takes effect—

(a)in the case of an administrator who dies, on the filing with the court of notice of his death,

(b)in the case of an administrator appointed under paragraph 14 or 22 [F6who has not made a statement under paragraph 52(1)(b)], at a time appointed by resolution of the creditors’ committee or, if there is no committee, by [F7decision] of the creditors,

[F8(ba)in the case of an administrator appointed under paragraph 14 or 22 who has made a statement under paragraph 52(1)(b), at a time decided by the relevant creditors,] or

(c)in any case, at a time specified by the court.

(3)[F9For the purposes of sub-paragraph (2)(ba), the “relevant creditors” of a company are—]

(a)each secured creditor of the company, or

(b)if the administrator has made a distribution to preferential creditors or thinks that a distribution may be made to preferential creditors—

(i)each secured creditor of the company, and

[F10(ii)the preferential creditors of the company.]

[F11(3A)In a case where the administrator is removed from office, a decision of the creditors for the purposes of sub-paragraph (2)(b), or of the preferential creditors for the purposes of sub-paragraph (2)(ba), must be made by a qualifying decision procedure.]

(4)Discharge—

(a)applies to liability accrued before the discharge takes effect, and

(b)does not prevent the exercise of the court’s powers under paragraph 75.

Vacation of office: charges and liabilitiesE+W+S

99(1)This paragraph applies where a person ceases to be the administrator of a company (whether because he vacates office by reason of resignation, death or otherwise, because he is removed from office or because his appointment ceases to have effect).

(2)In this paragraph—

• “the former administrator” means the person referred to in sub-paragraph (1), and

• “cessation” means the time when he ceases to be the company’s administrator.

(3)The former administrator’s remuneration and expenses shall be—

(a)charged on and payable out of property of which he had custody or control immediately before cessation, and

(b)payable in priority to any security to which paragraph 70 applies.

(4)A sum payable in respect of a debt or liability arising out of a contract entered into by the former administrator or a predecessor before cessation shall be—

(a)charged on and payable out of property of which the former administrator had custody or control immediately before cessation, and

(b)payable in priority to any charge arising under sub-paragraph (3).

(5)Sub-paragraph (4) shall apply to a liability arising under a contract of employment which was adopted by the former administrator or a predecessor before cessation; and for that purpose—

(a)action taken within the period of 14 days after an administrator’s appointment shall not be taken to amount or contribute to the adoption of a contract,

(b)no account shall be taken of a liability which arises, or in so far as it arises, by reference to anything which is done or which occurs before the adoption of the contract of employment, and

(c)no account shall be taken of a liability to make a payment other than wages or salary.

(6)In sub-paragraph (5)(c) “wages or salary” includes—

(a)a sum payable in respect of a period of holiday (for which purpose the sum shall be treated as relating to the period by reference to which the entitlement to holiday accrued),

(b)a sum payable in respect of a period of absence through illness or other good cause,

(c)a sum payable in lieu of holiday,

F12(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., and

(e)a contribution to an occupational pension scheme.]