The joint administrators of PSL2021 Realisations Ltd, formerly known as Peacocks Stores Ltd, sought a fourth extension of the administration on the basis that the scale of the business and the terms of a sale agreement with a purchaser of some of the company’s assets required additional time. The company had one secured creditor more than 1,000 unsecured creditors with total claims in the order of £70 million.

The note was heard by Lord Braid in the Outer House of the Court of Session, with Ower KC appearing for the noters. No submissions were made by any other party.

Appropriate and expedient

Peacocks, part of the Edinburgh Woolen Mill group, was a fashion retailer that entered administration on 19 November 2020. It had one secured creditor, Banbury Street Ltd, the holder via assignation of qualifying floating charges and debentures created in favour of Barclays Bank in March 2019. Claims in relation to the company’s former employees as agreed preferential creditors were settled in full in November 2022.

The estimated outcome of the administration had consistently been predicted as resulting in a shortfall to BSL and no dividend payable to the unsecured creditors, other than by way of the prescribed part pursuant to section 176(A)(2)(a) of the Insolvency Act 1986. On 1 April 2021, the noters concluded an agreement for sale of some of the business and assets of the company.

It was averred by the noters that they still required to complete the transfer of the company’s business and assets to the purchaser and complete other outstanding tasks relating to the administration. The administration was one of the largest retail administrations in Scotland in recent times and given the number of counterparties involved in the transfer of lease interests in many properties, further time was required to conclude negotiations as well as finalise the company’s pre-administration tax position with HMRC.

Counsel for the noters submitted that it was appropriate and expedient for the administration to be extended a further 12 months. The company’s creditors would suffer no prejudice in allowing extra time to complete the objectives of the administration, and the fact that the secured creditor had only given consent for a six-month extension was not decisive.

Balance to be struck

In his decision, Lord Braid began by warning the noters: “It is important that administrators and their advisers bear in mind that an extension of an administration should never be applied for, or granted, as a matter of formality. It is not uncommon for the court to encounter cases where serial applications have been made, often on (literally) the same grounds from 1 year to the next, with no discernible sign of progress being made; and of course, if there is an expectation that extensions will be granted without difficulty, there is a danger that administrators will not be incentivised into completing the administration within the existing deadline, confident that another one will be along in the fullness of time.”

However, he went on to say: “I do not suggest that the present case, which I acknowledge is complex, falls into that category. Nonetheless, where an extension is to be applied for, basic concepts of fairness continue to apply no matter how complex the case and no matter how many creditors there are.”

Considering whether the extension ought to be granted, Lord Braid said: “Having regard to the size of the administration and the sheer number of stores which had to be transferred to the purchaser, or otherwise dealt with, I am prepared to take at face value the assertion that further time is required to conclude arrangements with the purchaser and with landlords under 24 leases which have not yet been surrendered. I also note that there is yet to be a distribution to the unsecured creditors out of the prescribed part and that the purpose of the administration, to achieve a better result for creditors as a whole than if the company were wound up, remains possible, having regard to the complications and costs which winding up would involve.”

He concluded: “There is a balance to be struck between, on the one hand, imposing a realistic deadline on the administrators so that the outstanding tasks can actually be completed; and on the other hand, running the risk of involving the administration in extra costs, if the extension granted is genuinely too short for all the work that requires to be done, recognising, too, that in some instances, the time taken is outwith the administrators’ control (the time taken by HMRC to deal with queries being a reason which is often cited by administrators). Ultimately I have decided to grant the administrators the 12 months sought on this occasion.”

Lord Braid therefore granted an order extending the administration until 16 November 2025.