Administrators duty to market assets

I think people are overstating what the administrators duties are here. They are simply to wind up the company in the interest of creditors in a timely manner as they see fit in accordance with the legislation. This almost always involves the administrators fire selling everything. They will not undertake lengthy marketing activities or complete or enhance assets to realise the best price. Maybe people should have made themselves aware of this before rushing in for lenders to be signed up to be treated as creditors.

Under the Insolvency Act, 1986, an administrator has specific duties and responsibilities to creditors, and in the first instance will take control of the company with a view to business rescue.



They have a duty to act in the best interests of creditors as a whole, and will attempt to realise the highest returns for all groups if rescue is not possible. If this also fails, they must attempt to achieve a better result for creditors than if the company had been liquidated.



An administrator adopts diverse roles and responsibilities during a formal insolvency procedure, as an officer of the court and an impartial agent/manager of the company, and has a duty to act with integrity and good faith.


Apparently !

Please don't selectively copy sections out of context. FS will not continue as a going concern and the remit of the administrator is clearly not this. It is therefore as your link states:

An administrator has a duty to perform his functions:

- As quickly and efficiently as is reasonably practicable (paragraph 4, Schedule B1).

- With regard to the interests of the creditors as a whole.

I know it may seem depressing and odd that the administrator is flogging everything off in a quick manner but that is the reality. Remember that their hourly rate is in the multiple hundreds, so any long drawn out sales process will not benefit creditors anyway.

You keep banging on about investors being treated as creditors, even though it was pointed out to you several times by people involved in FSAG that this was only for the purposes of representation on the creditor's committee. Even on that committee, 4/5 members are treated as investors if my memory serves me right. You made plenty of insightful posts in the pasts, so it would be sad to see you go down the dark path of some other forum members (hints: <1% diversification, 16+% pa return).

defaultinator - that is a very unkind comparison you make I have taken the time to go back through all of the administrators documents and to check what the administrators actually said:

- You are right in as far as the administrator is seeking legal advice to establish what the position of investors is and may need to apply to a court to enforce this.

- However in addition to investors agreeing to be treated like creditors for the purposes of representation at the creditors committee, investors have also agreed that the Administrators can take their remuneration from all proceeds, both to investors and creditors and both from company funds and those held in trusts.

I do still however think I was correct here. If, as it sounds as if it is, trusts did not have investors as their beneficiaries, then under administration law what right would investors have to the proceeds of these loans apart from as unsecured creditors? I am not a QC in this area but I suspect the answer is actually legally quite simple, they are unsecured creditors. This is all established by company law, see uk.practicallaw.thomsonreuters.com/9-518-5211?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1 for the order of creditors in the UK. There is not, and a court cannot introduce, a special 'investor' class of creditor. Truth is any secured creditors will get paid out in full before unsecured creditors receive a penny. I am happy to be quiet on this subject and wait for the QC to deliver their advice, but as I see it there is no other potential outcome.

This is why I wanted to put pressure on the FCA to say, hey wait a second the road we are going down here will lead to pledges made by Directors of a FCA regulated company about investor assets being safeguarded being totally ignored. The route will inevitably lead to preferred creditors getting paid in full out of assets which should have been ringfenced for investors. The FCA would then have been under immense pressure to put in place a mechanism to run down the loanbook rather than investors being left in the unenviable position of Administrators saying accept this or we will have to resign.

The obstruction is the worry the administrators may have of having sufficient funds to pay for their services through to 2022 (as you predict) given the loans paying up now are likely the ones easiest to liquidate/refinance