Applications to extend the period of an administration in the Court of Session

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Applications to extend the period of an administration in the Court of Session

29.6.12

As some may be aware, the Court of Session last year issued a Practice Note on the subject of making applications to extend the period of administration beyond the initial 12 month period.

Although the Insolvency Act 1986 seems only to anticipate the consent of creditors being required if the period of administration is being extended without recourse to the court, the Insolvency Judges of the Court of Session have taken the view that creditor consent is also required for an application to court.   The 12 month period was introduced by the Enterprise Act 2002 to speed up the process of either recovering a failing business, or finally putting it out of its misery and giving creditors whatever return they may receive more quickly, but there is a concern that in fact administration has become liquidation by another name, particularly if extensions are granted “on the nod”.