On 7 August 2025, Simon Gleeson (sitting as a deputy Judge of the High Court) handed down judgment (i) granting an application by BTI 2014 LLC and B.A.T Industries P.L.C. (together, “the Applicants”) to remove the Administrators of Windward Prospects Limited (in Administration) from office under paragraph 88 of Schedule B1 to the Insolvency Act 1986 on the grounds (inter alia) of a conflict of interest and (ii) refusing a cross-application by the Administrators to appoint conflict administrators.
The removal was held to be justified on three grounds. First, the Administrators had a conflict of interest in respect of a major asset of the Administration which could not be remedied by the appointment of conflict administrators. The court found that the correct approach in such cases is to determine whether the conflict can be managed in a way which allows the administrator to continue in office without being affected by the conflict (at [88]-[92]). The court concluded that so many of the remaining functions of the Administration were affected by the conflict that, if conflict administrators were appointed, there would be almost nothing left for the Administrators to do (at [93]). As such, the appointment of conflict administrators would not provide a satisfactory solution (at [93]).
Second, the Administrators’ recent conduct gave cause for a loss of confidence in the Administrators’ ability to act in the real, substantial and honest interests of the Administration (at [111]-[136]). In response to an invitation by the Administrators to take into account the impact of removal on their professional reputation, the court concluded that reputational damage is not a reason against removing an Administrator if good cause for removal can be shown (at [184]-[186]).
Third, the Applicants argued that, since they were the overwhelming majority creditors, and no other creditor had expressed a view, their views should prevail. The court was tempted to say that this point was simply an irrelevance because if an applicant can satisfy the court that there is good cause for removal, removal should be ordered regardless of what proportion of the creditor body the applicant represents (at [62]). In a similar vein, a clearly defective administrator should not be kept in post simply because this is the wish of a large majority of creditors (ibid). The court also doubted the utility of the authorities which address the weight to be given to the views of the majority of creditors on the basis that they did not deal with the case at hand where the minority of creditors had not expressed any view at all (at [63]).
A copy of the judgment is available here.
James Sheehan KC, William Willson of South Square Chambers and Grace Ferrier acted for the Applicants, instructed by Kevin Lloyd, Richard Lawton, Peter FitzGerald and Sarah Sharp of Hogan Lovells International LLP.
