do all that they can to reassure directors that entering administration under a PIP regime will not necessarily rule out their inputting into decisions about the future of the company or business. This can be done, as suggested above, by ensuring that administrators gather and consider all information relevant to the company’s future when making decisions and strategies or taking actions.

Conclusions

The Enterprise Act 2002 succeeded in placing administration at the heart of efforts to deal with companies in distress. There is work to be done, however, to make this process the finished product with regard to costeffectiveness, accountability, fairness and conduciveness to the exercise of informed and expert judgements. There is scope, for instance, for further procedural streamlining in order to lower costs.

Current arrangements and approaches leave a number of questions to be resolved. It remains to be seen whether the judgements of administrators will be enhanced by the inclusiveness of the administration process or whether that inclusiveness will operate within tight scheduling so as to stifle expertise. Further residual issues are whether lenders will retreat from the use of administration and increasingly secure loans in ways that revive other procedures such as the LPA receivership; whether the use of administration as a substitute for liquidation needs to be controlled further; and whether the EA reforms will lead to a fragmentation of credit arrangements that makes rescues excessively difficult.

On this last issue, a central question is whether a point will be arrived at when it is necessary, as suggested by the EHYA, to restrict the rights of certain parties in a more radical fashion so as to render administration more responsive to corporate crises. A related question is whether there is, or will soon come, a need for a new approach to super-priority funding in order to incentivise the supply of rescue funds appropriately.

Co-ordination between administrators, directors and others will remain an issue within administration and attention may have to be paid to the propensity of the regime to encourage directors both to seek appropriate and timely help from outsiders and to assist the administrators in carrying out the latter’s functions. Whether the complexities of the paragraph 3 statement of administrators’ objectives will unduly inhibit co-operation and information supplies is a matter for continued monitoring and much may depend here on the way that the courts

oversee the administrator’s duty to pursue those objectives and to serve the interests of all creditors.

As for the judges, the indications are that they are sympathetic to the development of administration as a streamlined tool of rescue. They have sown the seeds for a version of super-priority lending and have shown that they are inclined to defer to the business judgements of administrators. In other respects, though, the implications of the judges’ decisions are less certain. The Spectrum Plus case left issues hanging concerning the control that is necessary if charges over book debts are to be deemed fixed rather than floating. It also remains to be seen whether Spectrum Plus (together with the prescribed part provisions of the EA 2002) will increase the fragmentation of credit to a degree that signifi- cantly impedes rescue. A further worry may be whether giving priority to non-domestic rates during the administration – as in Exeter City/ Trident – will prove a ‘disaster’ for rescue in spite of recent legislative responses. The judges, as well as the variety of other actors involved with administration, will have to rise to a number of challenges if administration is to realise its full potential as a rescue and reorganisation process.