Two administrators debate enforcement and administration expenses

In the absence of evidence as to why security should not be enforced against a company in administration, a court will generally be minded to grant permission to enforce.

An administrator of a residential housing property did not promote bullet payments due to tenants from unsecured claims to administration expenses simply by collecting rent and insuring the relevant properties.

This was an unusual case in which two administrators fought over when security could be enforced and whether certain payments due under pre-administration contracts had become administration expenses, and so payable with priority over and above the claims of unsecured creditors and floating charge holders. KSF, a bank in administration, was a secured creditor of UKHA, a company also in administration, which was in the business of sale and leaseback of residential property. KSF wanted to enforce its security but UKHA’s administrators did not consent, so KSF sought the court’s permission to enforce…

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