Administrators were appointed by the secured creditor of a joint venture which owned a development site overlooking the River Thames. Upon appointment, the administrators enlisted CBRE to consider what enhancements could be achieved within the site's current planning permission to increase its value. The administrators also considered the re-financing of the development though without success. CBRE (who had previously advised the secured creditor) then conducted a sale and marketing process resulting in a £77.4m sale.

Liquidators were subsequently appointed over the JV and unsuccessfully claimed against the administrators. The liquidators alleged that the administrators had sold the property at some £37m undervalue and that, if the administrators had performed their duties, they would have sourced financing of circa. £350-400m to complete the development. The liquidators alleged that the failure to obtain the funding had resulted in losses of circa. £250m. 

The judge held that regarding the sale price, the administrator's duty is to take reasonable care to obtain the best price achievable in the circumstances as the administrator reasonably perceives those circumstances to be. The administrators were also entitled to delegate aspects of the sale and rely on "apparently competent" professionals (in this case CBRE).

The judge confirmed that if an administrator is pursuing the third administration purpose, the administrator's fiduciary duty is modified and owed to the secured and preferential (if any) creditors, provided the unsecured creditors are not unnecessarily harmed.

Further, the choice of administration purpose will only be challengeable if it was "made in bad faith or was clearly perverse". Lastly, the administrators have no obligation to consult the company's shareholders and directors as their appointment is to bring independent judgment to the company.  

Re One Blackfriars Ltd (in Liquidation) [2021] EWHC 684 (Ch)

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