What is Meant by the language to “Consider” in the Insolvency Legislation ?

The recent case of Dolfin Asset Services Ltd v Stephens & Anor (Re Dolfin Financal (UK) Ltd) [2023] EWHC 123 (Ch) (“Dolfin“) concerned a special administration, but it has relevance to administrators more generally.  In particular, when it comes to the judge’s view of what is meant by the word “consider” – which is phrase used in the insolvency legislation when it comes to making decisions.

The insolvency legislation often requires an administrator to make a decision based on what they “think” or “consider”, putting the onus on the officeholder. For example:

1. an administrator must perform his functions with the objective of rescuing the company as a going concern unless he “thinks” it impracticable; and
2. an administrator shall make an application to end an administration if he “thinks” the purpose cannot be achieved.

This is of course purely subjective and what one officeholder “thinks” or “considers” may well be different to what another officeholder would “think” or “consider” faced with the same question. So, how does an office holder know if they are making the right decision?

Previously, Mr Justice Snowden (as he then was) was asked to consider the meaning of “thinks” in the context of paragraph 3 of Schedule B1 of the Insolvency Act 1986 which sets out the objectives of an administration.   In that case (Davey V Money [2018] Bus LR 1903) Snowden gave comfort to practitioners saying that use of the word “thinks” was a clear indication that parliament intended to give administrators latitude when deciding on which objective to pursue.   Furthermore, that an administrator’s decision would only be open to challenge if it was made in bad faith or perverse.

In this case, having considered Davey, ICC Judge Briggs said it was appropriate to take the same approach to the interpretation of the word “considers” – perhaps not surprising, but helpful, nonetheless.

What this means for practitioners is that where the insolvency legislation requires them to “consider” or “think” something then provided they exercise commercial judgment when making a decision a court is extremely unlikely to find that the decision was a wrong one.