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James Morgan QC successfully overturns appointment of administrators

In Re Capital Funding One Ltd [2017] EWHC 3567 (Ch), James acted for the applicant company which argued that administrators had not been validly appointed over it by a QFCH using the out of court process. 

The secured creditor had relied on the alleged non-payment debt as an event of default under its debenture entitling it to make the appointment. But, as HHJ Hodge QC held, on a true construction of the agreement between parties the applicant was required only to pay the secured creditor when it had itself received payment from the ultimate borrower and, as this had not happened, the appointment was invalid. 

The case demonstrates the risks of an out of court appointment, particularly where the parties’ business dealings are informal and not fully reduced to writing.

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