Mable Commercial Funding Ltd (In Administration), Re [2025] EWHC 780 (Ch)

[2025] EWHC 780 (Ch)Case No CR-2008-000028
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
IN THE MATTER OF MABLE COMMERCIAL FUNDING LIMITED (IN ADMINISTRATION)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Venue The Rolls Building, 7 Rolls Buildings, Fetter Lane, LondonDate Wednesday, 12 th March 2025
EC4A 1NL
Before
THE HONOURABLE MR. JUSTICE HILDYARD
MR. RYAN PERKINS appeared for the Administrators of Mable Commercial Funding Limited (In Administration)
Approved Judgment
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[1]This is my judgment in the matter of Mable Commercial Funding Limited, which is in administration. The joint Administrators (whom I shall call “the Administrators”) of Mable Commercial Funding Limited (which I shall call “Mable”) have applied by an application notice dated 28 January 2025 for an order fixing the time at which they are to be discharged from liability under paragraph 98 Schedule B1 to the Insolvency Act 1986 (which I shall call respectively “the Application” and “the Act”).[2]Mable was the holding company of various subsidiaries within the Lehman Brothers UK Group of companies (which I shall call “the Lehman Group”). Mable originally entered into Administration on 23 September 2008. Unlike many of the other Lehman companies, it did so by a resolution of its board of directors pursuant to paragraph 22 of schedule B1 to the Act. The purpose of the Administration has been the second objective set out in paragraph 3 of Schedule B1: that is to achieve a better result for Mable’s creditors than would have been likely if Mable had been wound up without first being in administration.[3]The Lehman Administrations, including the Administration of Mable, have been long running. In the case of Mable, the Administrators’ term of office has been extended on a number of occasions. The last extension was granted by me on 25 November 2022, almost three years ago, and expires on 30 November 2025. In effect, this extension was granted in order to enable an orderly treatment of the various assets it held which had to be dealt with before its administration could be completed. It is only recently that this has been achieved: I return to that later in this judgment.[4]At the same time as granting an extension of Mable’s administration, various other orders in relation to other companies in the Lehman Group, including administration extension orders, and also discharge orders rather similar to the one now sought, were also made on that occasion.[5]My reasons and exploration of the law and practice in respect of this relief can be found in Re Lehman Brothers International (Report) [2020] EWHC 2995 (Ch) (which I will refer to as “the November 2022 judgment”).[6]During the course of the administration of Mable, the Administrators have realised and distributed over £650 million worth of assets to Mable’s creditors. The result of the various distributions made, which I shall come back to describe shortly, is that Mable no longer has any assets. Its assets have been distributed in full. Mable has no tax liabilities and no liabilities to creditors outside the Lehman Group.[7]By way of parenthesis, I should note there that, as explained by Mr. Perkins, HMRC’s practice is no longer to give a clearance letter. He explained that this was what they were doing although they did not explain the reason why, though that may be obvious to some. The practice has come to an end and HMRC simply have posted that fact. However, it is also the fact that the Administrators are quite satisfied, and so am I, that that is the position as regards the Revenue.[8]In these circumstances, the Administrators consider that the purpose of the Administration has now been sufficiently achieved. In turn, in those circumstances, it is the obligation of the Administrators to seek to relinquish office and seek an order for discharge in order that the company should ultimately be dissolved in accordance with the statutory procedures as soon as reasonably practicable.[9]In this case, the Administrators have made clear that they intend to vacate office on 21 March 2025, which is in less than ten days’ time. They intend to do so by sending a notice to the Registrar of Companies, pursuant to paragraph 84(1) of Schedule B1 to the Act in the normal way. Mable will then be automatically dissolved on a date falling three months after the delivery of such notice, subject to, as Mr. Perkins has also pointed out to me, the provisions of paragraph 84(7) of Schedule B1.[10]It may be wondered why the Administrators have thought it necessary to return to court for their discharge. In ordinary course where an administration is not initiated by the court but by the directors and creditors, it would not be necessary. But in this case, the order is sought and is required, because the Administrators’ proposals as approved by the creditors stated that:
“the Administrators shall be discharged from liability pursuant to paragraph 98(1) Schedule B1 IA86 in respect of any action of theirs as Administrators at a time determined by the Court”
[11]It is therefore necessary and appropriate for the time of discharge to be fixed by the court. I note in that regard that the court always has jurisdiction in this regard.[12]As has become usual, it is proposed that the Administrators’ discharge will take effect on a date falling 28 days after the notice under paragraph 84(1) is registered by the Registrar of Companies save in respect of any claims notified to the Administrators prior to that date, which is the reason why I have mentioned (in paragraph [9] above) sub-paragraph (7) of the relevant paragraph.[13]It is important first to explain that my role is a limited one. So far as material, paragraph 98 of Schedule B1 provides as follows:
“98(1)Where a person ceases to be the administrator of a company (whether because he vacates office by reason of resignation, death or otherwise, because he is removed from office or because his appointment ceases to have effect) he is discharged from liability in respect of any action of his as administrator.”
[14]As is apparent from paragraph 98(1), a discharge from liability is an automatic consequence of an Administrator’s appointment ceasing to have effect. The exercise of my discretion only relates to the time at which the discharge takes effect. That is why I say I have a limited role in the matter.[15]In discharging that role there are essentially two primary matters that I need to see addressed and be satisfied about from the evidence. First, the Administrators should explain whether any of them is subject to any potential claims. Secondly, the Administrators should be seen to have notified creditors of the Application and they must inform the court whether any claims have been notified or whether anyone has indicated that they would object to the proposed discharge. This has been explained by Snowden J (as he then was) in Re Nortel Networks France SAS [2019] EWHC 2447 (Ch) at [19].[16]I also addressed these principles in my own judgment in the November 2022 judgment. I referred to Nortel in that case and also to another case called Re Angel Group Limited, a decision of Rose J (as she then was) reported at 2016 2 BCLC 509, at [35], which explains the rather limited effect in one sense of the discharge, in that it expressly does not apply to exclude claims for misfeasance under paragraph 75 of Schedule B1.[17]As I say, in my November 2022 judgment, I sought to summarise the legal principles in five sub-paragraphs which perhaps could be added from paragraph 88 of that judgment. “(1) discharge itself is the consequence of the Application and operation of paragraph 98(1) and there is neither need nor room for any order in that regard; (2) the timing of the discharge, however, must be fixed: in the case of an administrator appointed out of court, this may be done by the creditors' committee or if there is none by decision of the creditors, but in the case of a court-ordered administration this must be by the court (which, for the avoidance of doubt, has power to fix “In any case”); (3) the purpose of discharge, as well as good order, is to insulate the administrators, once they no longer retain assets of the company out of which they are entitled to meet any liability properly incurred by them, from liability in respect of claims relating to their handling of the administration, except for claims already notified and misfeasance claims brought with the permission of the court pursuant to paragraph 75; (4) the order fixing the time will ordinarily be sought and made before the termination of the Administrators’ appointment, but will not be such as to take effect before such cessation; (5) the order fixing the time of discharge will ordinarily stipulate that discharge is not to take effect for a further period (usually about 28 days) after cessation of the Administrators’ appointment to give a final opportunity for review of their handling of the administration by, for example where the company has moved into liquidation, by the liquidator, and for any claims to be advanced which might justify a charge over the company’s assets.”[18]It follows from what Rose J explained also that there is no need for an Administrator to point to any specific justification for obtaining a discharge, such as some prejudice, which might otherwise be satisfied. It is only the timing with which I am concerned.[19]In this case I am satisfied, first, that the Application has been duly notified to Mable’s creditors. In this regard:(a) On 6 February 2025 the Administrators published a notice on the Mable administration page of the PricewaterhouseCoopers website. That notice advised creditors that the Administrators intended shortly to apply to court to specify the time at which their discharge from liability would take effect.(b) Posting information on the administration website is the method by which the Administrators have generally communicated with Mable’s creditors so it is not out of the ordinary by the standards of the particular administration.(c) The same notice was sent to other companies: LBIE, a company called SPML and PML, which I shall return to soon, that is Southern Pacific Mortgage Limited and Preferred Mortgage Limited, which owned long-dated assets such as mortgage-backed securities which have continued to generate income and will continue to generate income until 2041 and in which Mable has been for some time now only the trustee or asset paper title holder.(d) The witness statement, which is admirably clear, made in support of the Application by Alison Campbell Grant, one of the five Administrators of Mable, has also been published in this way.[20]I note in this first respect also that no one has raised any objection to the order sought. No one has appeared today and a careful monitoring has been made, as I understand it, of any correspondence which might indicate any such objection.[21]There is one curiosity in relation to the issue of notice which I should mention. An outstanding charge over Mable’s assets is held by Starwood Hotels and Resorts Worldwide Inc, who merged with Marriott International Inc, a well-known hotel operator in 2016. In 2014, it became apparent to the Administrators that Starwood’s secured debt claim against Mable had been satisfied in full and the Administrators sought express confirmation of the position in correspondence.[22]In July 2014, Starwood stated that there was no reason to think that the secured debt is not completely discharged, subject to confirmation from its account team. Unfortunately, that confirmation was never in fact given, and after the merger with Marriott, Marriott did not respond to further correspondence from the Administrators. This correspondence included an express request by the Administrators for confirmation of Marriott’s position in a letter dated September 2024 which Mr. Perkins took me to. No reply was received to that letter either.[23]In view of that silence, and in view of the fact that the Administrators have carefully considered whether there is any claim which might be secured by the charge, and found that there was none, I consider that it is reasonable to and I should draw the conclusion that there is no unsecured claim or secured claim by Marriott, whether in its own right or in right of its acquisition of Starwood against Mable.[24]As I have indicated previously, it is only very recently, however, that the Administrators have felt able to conclude that the Administration could at last be brought to an end. That is because the orderly disposal or distribution of its assets, which I have explained was the purpose of the three-year extension granted in November 2022 proved complex and has only recently been achieved.[25]The assets which caused these difficulties can be described as follows. First, it had the share capital of the mortgage companies I previously mentioned, SPML and PML. As I also indicated, these are long-dated assets such as mortgage-backed securities which continue or have continued to generate income, and will do so until 2041. Secondly, Mable held unsecured claims against LBHI, valued at just under $20 million. Thirdly, Mable held the share capital of a company called Storm Funding Limited (“Storm”) also a part of the Lehman UK Group. And fourthly, Mable held just over £13 million of cash.[26]The most difficult part of these assets in terms of bringing a conclusion to the administration related to the shares in SPML and PML. The difficulty was resolved in the event, when a bid was submitted by the management team of SPML and PML which was accepted. The relevant share sale agreement was executed on 21 June 2024 and the sale was completed on 9 August 2024. It is that which has really paved the way to the Application now made.[27]As to its other assets, Storm was dissolved on 23 March 2023. The claim against LBHI was subject to an option in favour of another company in the Lehman UK Group, possibly the best known, called LBIE (or “Libby”) and LBIE exercised its option on 28 February 2025, just days before. The cash has been dealt with presumably by distribution to the relevant entities within the Lehman UK Group.[28]It is in those circumstances that I have been satisfied that not only that Mable has no assets but also that there is no purpose in the continuation of its administration; it is now an empty shell.[29]Returning to the second matter on which I must be satisfied, this is that the Administrators are not aware of any potential claims arising out of their conduct, nor of any factual matters that they consider should give rise to such claims.[30]As to that, the Administrators who are obviously experienced in the matter considered carefully whether there are such claims or whether there is any reason why the time of discharge should be delayed. This is, in a sense, a belt to the braces of the fact that such claims would not be barred in any event, as I have explained. I am satisfied that not only the Administrators will have done what is reasonable for them to do to check the position, but they have also published notices on the administration of the PricewaterhouseCoopers website in accordance with their standard process which should have notified all concerned and, as it were, drawn the curtain on any claims unless they notified them within the time indicated.[31]Accordingly, I am satisfied as to the two matters which are the primary matters which I must address in the context of the Application in discharging the relatively limited function which I have to discharge.[32]Mr. Perkins also made three other points in addition to those two primary points. The third point he made was that the order is consistent with the Administrators’ proposals, which expressly contemplated an application to the court to fix the time of discharge both at the time of the initiation of the administration and at the time of the November 2021 judgment when I made the final extension. These proposals were of course approved by Mable’s creditors.[33]The fourth point that Mr. Perkins made was to reassure me that the Application is not premature. That is obviously so in this case. In the case of other Lehman companies which were before me at the time of the November 2022 judgment, I was not satisfied that it was so in the case of LBUKRE. There I was not satisfied that the administration process was sufficiently completed so I declined to give an order of discharge until it was, though, ultimately, from being notified that all was complete, I made an order on the papers. As I say, I am satisfied that no such problem arises in this case as is evident from what I have explained.[34]In all these circumstances, and with gratitude for the careful preparation of the case which is obvious, and the helpful presentation made to me by Mr. Perkins, I am entirely satisfied that it is appropriate for me to order the discharge to take effect in accordance with the draft which has been provided to me. (Proceedings continued, please see separate transcript) - - - - - - - - (This Judgment has been approved by the Judge) Transcript of the Stenograph Notes Marten Walsh Cherer Ltd., 2nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP. Telephone No: 020 7067 2900. DX 410 LDE Email: info@martenwalshcherer.com Web: www.martenwalshcherer.com