Q&As

Where a company seeks to appoint an administrator using the out-of-court procedure in paragraph 22(1) of Schedule B1 to the Insolvency Act 1986, what formalities are required to effect this decision of the company? Is it an ordinary resolution of shareholders and if so, what is the statutory authority for this?

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Produced in partnership with Helen Kavanagh
Published on: 17 June 2019
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Paragraph 22(1) of Schedule B1 to the Insolvency Act 1986 (IA 1986) simply states that: ‘a company may appoint an administrator’.The formalities required for an administrator’s appointment are set out in the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, rr 3.23–3.26. When the appointment is to be made by a company, a company resolution to appoint an administrator must be filed at court with the Form IR 2016, LN r3.24 AM (Notice of appointment of an administrator by a company or the directors of a company (where notice of intention to appoint has been

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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