LCP Proudreed PLC - Irish Stock Exchange

3. Legal and regulatory considerations relating to the transaction structure
Administration
In certain circumstances an administrator may be appointed in relation to a company the effect of which
would be that, during the period for which the administration order is in force, the affairs, business and
property of the company will be managed by the administrator. The appointment may be made:
(i) by the court, on the application of the company, its directors, any or all of its creditors, or in the case
of companies registered in England and Wales the justices’ chief executive for a magistrates court,
provided that the court is satisfied that the company is or is likely to become unable to pay its debts
and that the administration order is reasonably likely to achieve the statutory purpose of
administrations; or
(ii) by the holder of a ‘‘qualifying floating charge’’ (as defined in the Insolvency Act) over the whole or
substantially the whole of the company’s property who gives notice of its intention to appoint an
administrator to any holder of a prior qualifying floating charge and files with the court the
appointment in prescribed form (including a statutory declaration that the charge was enforceable
on the date of the appointment and a statement by the proposed administrator that he believes the
statutory purpose of administration is reasonably likely to be achieved) and such other documents
as may be provided; or
(iii) by the company or its directors if it or they give notice of intention to appoint an administrator to
any person who may be entitled to appoint an administrative receiver or an administrator of the
company, such person declines to appoint an administrative receiver or administrator (as the case
may be) and the appointment is filed with the court in prescribed form (including a statutory
declaration that the company is or is likely to become unable to pay its debts and a statement by the
proposed administrator that he believes the statutory purpose of administration is reasonably likely
to be achieved) along with such other documents as may be provided.
An interim ‘‘moratorium’’ on enforcement action against a company will come into effect on the filing
with the court of the application for making of an administration order by the court or the notice of
intention to appoint an administrator out of court, or on the presentation of a petition for an
administration order, as the case may be. During the period for which such moratorium is in force, inter
alia, no steps may be taken to enforce any security over the property of the company or partnership except
with the leave of the court (and subject to such terms as the court may impose). The moratorium remains
in force where an administration application has been made and has not yet been granted or dismissed,
or has been granted but the administration order has not yet taken effect, or where a floating charge
holder has filed notice of intention to appoint an administrator with the court, until the appointment takes
effect or until five business days expire with no administrator having been appointed, or where the
directors of or the company itself have/has filed with the court notice of intention to appoint an
administrator, until the appointment takes effect or until ten business days expire with no administrator
having been appointed.
During the period for which a company is in administration, inter alios, no steps may be taken to enforce
any security over the property of the company or partnership except with the leave of the court (and
subject to such terms as the court may impose) or the consent of the administrator.
Accordingly, if an application is made or petition is presented for the making of an administration order
by the court, or notice is filed with the court of the intention to appoint an administrator, or an
administration order is made or an administrator is appointed in respect of a Borrower or any of the other
Obligors incorporated in England and Wales (but subject always to the capital market exception
described below), the enforcement of the Obligor Security by the Borrower Security Trustee would not
be possible unless the leave of the court or the consent of the administrator was obtained, and would in
any case be delayed by the need to apply to the court for leave or to the administrator for consent.
Administrative Receivership
Background: At any time after the Obligor Security has become enforceable, the Borrower Security
Trustee (provided that it is indemnified and/or secured to its satisfaction) may, as directed by the Issuer
Security Trustee, pursue a number of different remedies. One such remedy is (in relation to security held
by the Borrower Security Trustee) the appointment of a Receiver over specific property or over all of the
Secured Properties belonging to the relevant Borrower.
Capital Market exception: The provisions of the Enterprise Act, amending the corporate insolvency
provisions of the Insolvency Act, came into force on 15 September 2003.
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