Citation(s) [1989] 1 WLR 368 | ||
Re Harris Simons Construction Ltd [1989] 1 WLR 368 is a UK insolvency law case concerning the administration procedure when a company is unable to repay its debts.
Contents
Facts
Harris Simons Construction Ltd was a building company. From April 1985 to 1988 its turnover increased from £830,000 to £27 million. It all came from one client called Berkley House plc. They had a close relationship but it went sour, and Berkley purported to dismiss them. It withheld several million pounds in payments. Harris Simons could not pay debts as they fell due or carry on trading. The report of the proposed administrator said it would be very difficult to sell any part of the business. Berkley said if an administration order were made it would give enough funding to let the company complete four contracts on condition it remove itself from the sites that were in dispute. The company therefore proposed an administration order under IA 1986 section 8(3) (now IA 1986 Sch B1, para 12(1)(a)). The question was whether the court should exercise its jurisdiction and whether the order would be likely to achieve the specified purposes of administration (now found in IA 1986, Sch B1, para 3).
Judgment
Hoffmann J held that an administration order should be made because there was a reasonable possibility that a purpose of administration, i.e. saving the company or business, would be achieved. This could also be termed as a "real prospect", or a "good arguable case". It did not need to be satisfied that the administration would succeed on the "balance of probabilities", although there needed to be a greater prospect of success than just a "mere possibility". His judgment went as follows.