Removing Administrators From Office

The recent Court of Appeal case Finnerty and another v Clark and another has provided welcome guidance on what constitutes good grounds to remove an administrator from office, under paragraph 88 of Schedule B1 to the Insolvency Act 1986 ("IA 1986").

It is already well established that the court should not order the removal of an administrator from office unless there is good cause to do so. Misconduct on the part of the administrator is not a prerequisite for such a removal, but, in order for an application to be successful, some 'serious issue' relating to the administrator's conduct of the administration must be shown.

The facts of the Finnerty case may help shed light on what constitutes a 'serious issue' in this regard. F was a director and shareholder of G Ltd, which had entered administration. Appointment of administrators to G Ltd had caused the company to become liable to pay default interest as part of the terms of its existing loan agreement with its