Part III
Common misconceptions and observations with the administration procedure in practice
Wrong mode of presenting Administration Applications and same not being treated as substantive proceedings
Administration Applications are substantive proceedings and ought to be treated as such. Although CAMA 2020 does not expressly prescribe the mode by which an administration application may be presented before a court, the Insolvency Regulations 2022 provide that an application for an administration order be headed “Administration Application”41 supported by an Affidavit and a Statement of the proposed administrator’s consent to act. In spite of the clear provisions of the Regulations, many applicants elect to approach the Court by way of an Originating Application, which is not the same as an Administration Application—a misconception likely attributed to the use of the term “application” by CAMA. As explained above, the procedure prescribed by the Regulations mirrors the procedure obtainable in England, which mandates an application for an administration order to be headed “Administration Application” as contained in Form Comp. 8 of the Bankruptcy and Insolvency Forms.42
The question which then arises is whether the provisions of the Regulations create a new Originating Process – an Administration Application or whether an applicant may adopt an Originating Summons—which is the prescribed method of commencing actions under Company Proceedings Rules—with the mandatory requirement that the originating process be headed “Administration Application”. The former position is to be preferred as having a process titled both “Originating Summons” and “Administration Application” might occasion an absurdity which could not have been what was intended by the drafters of the legislation. For this reason, any application for an administration order brought by way of an Originating Application or any other originating process not being an Administration Application ought to render the action incompetent, consequently robbing the Court of the jurisdiction to hear and determine the application.43 A case may, however, be made that where there is substantial compliance with the Regulations, even when the proceedings are commenced via a traditional originating process, the Court may lawfully exercise its jurisdiction.
The Regulations further provide that the Administration Application must contain the name of the company, a statement outlining the statutory basis upon which the application is being presented, the details of the shareholding of the company44 or that the company is limited by guarantee, the reason why the Applicant believes that the company is or is likely to become unable to pay its debts, the name of the proposed administrator, and the service address of the Applicant.45 In addition, the affidavit in support of the Administration Application must contain the company’s financial statements, details of any security known or believed to be held by the creditors of the company and whether such security entitles them to appoint a receiver or administrator, a statement that a receiver has been appointed where an appointment has been made, and details of any insolvency proceedings against the company.46
