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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Green v Group Ltd & Ors  EWHC 954 (Ch) (17 April 2019)
Cite as:  EWHC 954 (Ch)
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST
The Rolls Building, Fetter Lane
London, EC4A 1NL
B e f o r e :
| (1) Vincent John Green
(2) Mark Newman
(as joint Administrators of each of the Respondent Companies)
|- and -
|(1) Group Limited
(2) SCL Analytics Limited
(3) SCL Commercial Limited
(4) SCL Social Limited
(5) SCL Elections Limited
(6) Cambridge Analytica (UK) Limited
Andreas Gledhill QC and Eleni Dinenis (instructed by ITN) for the Professor David Carroll
Hearing dates: 18 March 2019
Crown Copyright ©
Mr Justice Norris :
"To date, as the Company's adviser, we owed our prime duty to the Company acting through its Board and took appropriate steps to ensure that the Board received appropriate advice on the available options. From now on, as our insolvency practitioners become potential Administrators, they will have to take a more independent and balanced approach, arranging for independent valuations of assets and recording information about the Company's affairs and dealings without compromising their future duty as administrators. Any advice that they give from this point will have to remain independent to avoid compromising the potential appointment as Administrators and will have to be disclosed to the court and the creditors. Once appointed Administrators, our insolvency practitioners will owe their prime duty to the creditors as a whole and must act as officers of the Court. They will have to realise and distribute assets, maximising realisations for creditors in order to achieve the statutory objective of the Administration. This may require them to investigate transactions and disposals and take recovery action against individual directors or submit adverse reports to the Secretary of State when reporting under the Company Directors Disqualification Act… This may, from the Board's perspective, appear hostile, although the administrators will merely be fulfilling their statutory duty as required."
The passage gives every appearance of being part of a standard form engagement letter and in the context in which it was used has to be read as explaining to Emerdata and to each of the Relevant Companies what the role of Crowe partners would be if appointed administrators of each of the Relevant Companies.
"In circumstances where we anticipate that there may be insufficient funds available from the realisation of assets we shall require our fees to be guaranteed by the directors and a payment on account will be requested before notices are dispatched to the court."
This passage again gives every appearance of being part of a standard form engagement letter and in the context in which it was used is probably to be read as requiring a fee guarantee by Emerdata (to whose board the letter is addressed) rather than a personal guarantee from each of the directors of each of the Relevant Companies.
"… the sober and considered views of the proposed administrators acting as insolvency practitioners and as officers of the court that notwithstanding the events of yesterday…. that there is a real likelihood of being able to realise the proprietary information and the business of the companies at a profit."
He went on to enquire:
"Is this not time, despite the urgency… for a really, really considered view as to whether, in all these new circumstances, administration is really going to likely result in achievement of the statutory purposes? … It will not be determinative but it will be highly influential… and it will figure in my judgment if I were to order administration."
"in the end, and relying as I do on the sober assessment of the insolvency practitioners concerned, I feel that the balance comes down, just, in favour of supposing that there is a real prospect of a better result in the event of administration and therefore that, unless there are some supervening or overriding reasons why in the exercise of my discretion I should refuse relief, I shall permit the matter so to proceed. This is the case especially since it does or would result in the reins being immediately taken up by professional persons independent of the present directors and answerable to the court."
As to the immediate marketing of the businesses of the Relevant Companies Hildyard J noted: -
"If [the presently envisaged first marketing steps] elicit no third-party response, that would cause the proposed joint administrators to, if not immediately apply for liquidation, at least return to the court to explain further the difficulty. …"
"does or would result in the reins being immediately taken up by professional persons independent of the present directors and answerable to the Court."
(a) To review their opinion about the objective of the administration;
(b) Having decided upon seeking a better return for creditors than would be achieved by an immediate liquidation, then to perform their functions in relation to that objective in the interests of the company's creditors as a whole;
(c) To perform their functions as quickly and as efficiently as was reasonably practicable;
(d) Recognising that acting in the interests of the company's creditors as a whole may involve the balancing of competing sectional interests, to avoid acting so as unfairly to harm the interests of any particular creditor or group of creditors;
(e) To get under their control the property of the company and to manage the affairs, business and property of the company;
(f) In so doing, to consider the conduct of every person who was a director of the company at any time in the three years preceding the administration (with a view to assisting the Secretary of State on disqualification issues);
(g) To examine as part of their duties under (e) and (f) what civil claims might lie at the suit of the company.
(This list is not exhaustive and is shaped by the issues that arise in this case).
(a) the fundamental question is what will be conducive to both the proper operation of the process of liquidation and to justice as between all those interested in the liquidation;
(b) although the majority vote of the creditors will in the normal course prevail, creditors holding the majority vote do not have an absolute right as to the choice of liquidator;
(c) the liquidator should not be a person (nor be the choice of a person) who has a duty or purpose which conflicts with the duties of the liquidator;
(d) the liquidator should not be the nominee of the person against whom the company has hostile or conflicting claims or whose conduct in relation to the affairs of the company is under investigation;
(e) the liquidator needs to act (and be seen to act) in the best interests of the creditors as a whole and properly to investigate all claims;
(f) it is no objection that a liquidator is the choice of a person who is concerned to pursue the claims of the company through the liquidator.
(I have largely adopted the formulation by Mr Stuart Isaacs QC in Stanleys International Betting Ltd  EWHC 1732 (Ch): it was not cited to me, but I believe it is uncontroversial).
(a) there were real concerns about the making of the administration order;
(b) there was an overwhelming case for independent investigation as to what happened (in the very widest sense) before administration and the joint administrators could not be trusted to cooperate in that process;
(c) the conduct of the joint administrators has fallen below the standards to be expected of such officeholders;
(d) if I were to appoint the joint administrators there would be a real risk of undermining public confidence in the insolvency process;
(e) it was important to avoid a mechanistic exercise of totting up the value of creditors' votes.
I will address these themes in the context of the affairs of Elections, which is the most significant of the Relevant Companies. Ms Addy QC accepted that the identity of the joint liquidators of Elections was really the key issue, and that to appoint the Joint Administrators as joint liquidators of the smaller Relevant Companies simply because Prof. Carroll could not object (because he was not a creditor) did not make sense.
"[office holders] are not personally responsible for compliance with the provisions of the DPA in respect of the data processed by the company, including but not limited to [SARs] made under section 7" (ibid at ).
"[Elections] accepts that it has not complied with the Enforcement Notice, nor has it sought to exercise its right of appeal against the Notice or contacted the ICO to discuss recovery of information in order to comply."
The Joint Administrators cannot go behind this.