The duties of an administrator in Schedule B1, paragraph 3 are theoretically meant to be exercised for the benefit of the creditors as a whole.[98] However the administrator's duties on paper lie in tension with how, and by who, an administrator is appointed. The holder of a floating charge, which covers substantially all of a company's property (typically the company's bank), has an absolute right to determine who the administrator. Under Schedule B1, paragraph 14, it may appoint the administrator directly, and can do so out of court. The company need not be technically insolvent, so long as the terms of the floating charge allow appointment. The directors or the company may also appoint an administrator out of court,[99] but must give five days' notice to any floating charge holder,[100] who may at any point intervene and install his own preferred candidate.[101] The court can, in law, refuse the floating charge holder's choice of administrator because of the 'particular circumstances of the case', though this will be rare. Typically banks wish to avoid the spotlight and any effect on their reputation, and so they suggest that company directors appoint the administrator from their own list.[102] Other creditors may also apply to court for an administrator to be appointed, although once again, the floating charge holder may intervene.[103] In this case, the court will grant the petition for appointment of an administrator only if, first, the company "is or is likely to become unable to pay its debts" (identical to IA 1986 section 123) and "the administration order is reasonably likely to achieve the purpose of administration."[104] In Re Harris Simons Construction Ltd Hoffmann J held that 'likely to achieve the purpose of administration' meant a test lower than balance of probabilities, and more like whether there was a 'real prospect' of success or a 'good arguable case' for it. So here the company was granted an administration order, which led to its major creditor granting funding to continue four building contracts.[105]
Portsmouth F.C., despite winning the FA Cup in 2008 and reaching the final in 2010, entered administration twice in 2010 and 2011.
