We look once again at the recent case of Re Active Wear Limited (in administration) (our other blog on another aspect of this case can be found here).
As part of the changes introduced in light of Covid-19, the Temporary Insolvency Practice Direction (MIPD) was introduced, to enable statutory declarations on notices of intention to appoint and notices of appointment of administrators to be sworn remotely, rather than having to be sworn physically in person.
In essence, what the MIPD does is say that any defect in process caused by administering a swear remotely does not invalidate the appointment, provided that the process set out in the MIPD is followed.
In Re Active Wear, the High Court ruled that despite the MIPD guidance not being followed, the appointment of administrators was valid.
Key Take-aways
This case suggests that if the MIPD remote swear guidance is not followed to the letter, it does not automatically invalidate the administration or appointment of administrators, and is potentially capable of being a defect that can be remedied by way of a Court application.
However, having to rely on an application to court is never ideal (and also has an associated cost.) It remains best practice is to strictly follow the process set out in the MIPD which essentially avoids the need for the court to confirm the appointment is valid if the steps set out in the MIPD are undertaken.
Re Active Wear
In this case, the statutory declaration was contained in a notice of appointment of administrators. The statutory declaration was made before a solicitor and contained the phrase ‘by remote’ and had been done by remote video conference.
However, contradictory to MIPD paragraph 10 (see here), the statutory declaration did not state that it was made by remote video conference, nor did the person authorised to administer the oath confirm this. The wording that was used instead i.e., ‘by remote’, was not deemed to be consistent with the MIPD and was therefore arguably defective.
Judgment
During the case, evidence was provided that showed that there were no technical defects during the remote video conference call itself. It was on this evidence that the judge was satisfied that although the wording in relation to the remote swear was not correct (therefore meaning the swear should have been done in person), there was no reason to deem that the procedure for making the statutory declaration was defective, and it was therefore capable of remedy. The judge therefore remedied the defect in the making of the statutory declaration under rule 12.64, and as a result it did not invalidate the administration or appointment of administrators.