Out-of-court appointment vs court order
Two out-of-court routes into administration — the QFCH under paragraph 14 and the company/directors under paragraph 22 — sit alongside the court order route. They are faster, cheaper and now handle the majority of UK administrations.
The bank or other secured lender appoints its own IP by filing Form 2.7B at court. Same-day. Doesn't need any notice period.
Board resolves and files a Notice of Intention. 5-business-day notice to any QFCH, then files the Notice of Appointment. Typical route where the company self-initiates.
Paragraph 22 — the directors' route
Directors resolve at a board meeting to appoint. The resolution must record that the company is or is likely to become unable to pay its debts and that administration is reasonably likely to achieve a statutory purpose. A director-authorised statement (Form 2.2B) confirms these points.
A Notice of Intention (Form 2.9B) is filed at court and served on any QFCH. Five business days later — or earlier, if the QFCH consents in writing — a Notice of Appointment (Form 2.10B) is filed, and the administrator takes office.
The interim moratorium under para 44 runs from filing the NoI. It halts winding-up petitions, execution, distress, forfeiture and repossession of goods on hire-purchase — see Retention of title claims for the specific position of ROT goods.
Paragraph 14 — the QFCH route
A qualifying floating charge holder can appoint directly by filing the Notice of Appointment at court, without notice period. The bank has to serve the company at the same time as filing, and the appointment takes effect immediately.
This route is often used when a bank wants to move a struggling borrower into administration ahead of any petition being issued — protecting the security while a sale is arranged. See QFCH rights for the definition and enforcement mechanics.
What blocks out-of-court
- A pending winding-up petition (unless it's stayed) — use the court route to auto-suspend it.
- An existing administrative receiver in office.
- A previous directors' or company appointment ended in the last 12 months (para 23).
- No QFCH consent and no 5-business-day notice period being given.
Frequently asked questions
What is out-of-court appointment?
The two 'self-service' routes into administration that don't need a court hearing: paragraph 14 of Schedule B1 (a qualifying floating charge holder appoints) and paragraph 22 (the company or its directors appoint). Introduced by the Enterprise Act 2002 to speed up rescue.
Who can appoint under paragraph 22?
The company (by shareholder resolution) or its directors (by board resolution). Directors' appointment is the most common route because it doesn't need a shareholder vote and can be arranged same-day.
What is a 'qualifying floating charge holder' (QFCH)?
A lender holding a floating charge (usually a debenture) over the whole or substantially the whole of the company's property, granted after 15 September 2003, which contains the right to appoint an administrator. Typically the company's bank.
What blocks the para 22 route?
Under Sch B1 para 25: (a) a winding-up petition is pending; (b) an administrative receiver is in office; (c) a previous director/company appointment ended in the last 12 months. If any applies, use the court route instead.
What is the Notice of Intention (NoI)?
A filing at court under para 26 warning that the company or directors intend to appoint. It must be served on the QFCH, who has 5 business days to either consent or appoint their own administrator. It triggers the interim moratorium.
Does the QFCH have to consent?
Yes for directors' appointment — the QFCH must be given 5 business days' notice and either consent or take no action. If they don't consent, they can appoint their own IP under para 14 to override the directors' choice.
How long does out-of-court appointment take?
Same day with QFCH consent (para 14 or fast-tracked para 22). Without QFCH consent, the 5-business-day NoI clock must run — so about 8–10 business days from initial instruction.
What happens at the moment of appointment?
The administrator's Notice of Appointment (with the IP's Form 2.2B consent) is filed at court electronically. Time of appointment is recorded on the sealed notice. Full statutory moratorium begins from that moment.
Which is cheaper — court or out-of-court?
Out-of-court, usually. Court applications add £1,600 court fee plus counsel and often £5,000–£15,000 of extra time cost. Out-of-court filings involve court fees of a few hundred pounds and less legal input.
Is out-of-court appointment less rigorous?
No — same statutory purposes, same rules, same standard of professional conduct. The only difference is the absence of a judicial gatekeeper at the start. Creditors retain all para 74/75 rights to challenge conduct.