Powers of directors of a company which is placed in administration
Essar Steel Ltd v Arcelormittal USA LLC
The court went on to distinguish instances where a company is placed in receivership by the appointment of a receiver manager and instances where the company is placed in administration by the appointment of an administrator. The court opined that the appointment of an administrator entirely supersedes the powers of the company and the authority of the directors in the conduct of its business and management of its assets.
The court of civil appeal concluded that in the absence of the prior written approval of the administrator or authorization of the court as expressly required under the Insolvency Act, there is no basis for the directors to claim that they retain a residual power to initiate proceedings on behalf of the company to challenge the appointment of an administrator. Whilst dismissing the appeal, the court ordered the directors who initiated the appeal to personally bear the costs of the case.