Insolvency Service issues guidance on extension of administration periods

Many readers will already have read issue 37 of the 'Dear IP' newsletter, which was published in October 2008.

In this newsletter, the Insolvency Service have issued guidance to insolvency practitioners on the practice of including a blanket resolution for the extension of an administration period in the administrator's proposals. In the Insolvency Service's view, such a practice runs contrary to the intention of paragraph 76(2)(b) of Schedule B1 to the Insolvency Act 1986.

The Insolvency Service accept that there will be occasions when it is apparent to a proposed administrator from the outset that the administration may need to run for more than a year (such as when the company has a large amount of book debts to collect). In these circumstances, the Insolvency Service does not object to the administrator seeking a resolution to enable him/her to extend the administration period. However, the practice that the Insolvency Service wishes to avert is the practice of including this sort of resolution into the administrator's proposals as a matter of course.

For more information on administrators proposals, please contact any member of our Insolvency and Business Recovery team.