The recent decision in CDI Realisations Limited is a short one, but it sits against a much longer-running debate about creditor consent for administration extensions and, in particular, when creditor status should be assessed for these purposes.

While the facts of CDI are relatively straightforward, the decision is a useful addition to the growing body of authority and guidance that points towards a pragmatic, interest-based approach to consent under Schedule B1.

The statutory framework

Schedule B1 to the Insolvency Act 1986 permits a single extension of an administration by creditor consent, without a court application. The relevant creditors are identified by the administrator’s paragraph 52(1)(b) statement on appointment, which records which classes are expected to receive a distribution. In broad terms:

  • secured creditors expected to receive a distribution must consent; and
  • preferential creditors expected to receive a distribution must also consent.

On its face, the regime ties consent to the position stated at the outset of the administration.

The practical difficulty

Creditor interests often change during an administration. Secured creditors may be repaid early, or anticipated distributions may fall away as realisations develop.

The Insolvency Service historically treated creditor status as fixed at entry into the process, regardless of later economic reality. This created practical problems where administrators were required to seek consent from creditors who had already been paid in full and no longer had a financial interest.

Pindar, Toogood and a shift in approach

In Pindar and Toogood, administrators extended administrations without consent from secured creditors who had been repaid in full. The court was asked to confirm the validity of those extensions.

The judges held that consent was not required from creditors with no continuing economic interest. The focus was on commercial reality rather than rigid classification at appointment, marking a departure from the Insolvency Service’s long-standing position. This was something we explored in our previous blog in 2024.

Dear IP 168

In June last year, the Insolvency Service issued Dear IP 168, signalling a shift in its approach to creditor status. The guidance accepts that, for a given statutory provision, an officeholder may assess whether a person is a creditor at the relevant time by reference to their genuine economic interest.

Although the legislation was unchanged, the guidance recognised that creditor status is not necessarily fixed at appointment and is context specific. Uncertainty has nevertheless remained, particularly where Schedule B1 consent requirements are tied to the administrator’s original paragraph 52 statement.

The CDI Realisations decision

CDI Realisations Limited[1] adds a further piece to this picture.

Administrators were appointed over two companies and in both cases the administrators made a paragraph 52(1)(b) statement indicating that secured creditors would be paid and that there was a prospect of a distribution to preferential creditors. On that basis, Schedule B1 would ordinarily require the consent of both secured and preferential creditors to any extension.  By the time an extension was sought, however, the position had changed. 

In one administration the preferential creditor (HMRC) confirmed it did not have a claim, in the other administration the administrators decided post appointment that it was not worth pursuing a claim that would have seen a return to preferential creditors – and therefore those creditors would not receive a distribution.   As such, the administrators proceeded on the basis that only the consent of secured creditors was required to extend the administrations.

A further extension was then required to the administrations, which required the administrators to apply to court.  As part of the applications the administrators asked the court to extend but also to retrospectively validate the previous extensions if they were invalid.  This was in light of the fact that the administrators had made a paragraph 52(1)(b) statement indicating a distribution to preferential creditors, but the administrations were extended by the consent of the secured creditors alone.

The court agreed to the further extensions, without the need to validate the first extensions agreeing that only the consent of the secured creditors was needed to the first one.

Why wasn’t the consent of preferential creditors required?

No preferential creditors

In one administration the company did not actually have any preferential creditors, it having later transpired that HMRC did not have a preferential claim.

This bears some similarity with the Toogood case where post appointment it was discovered that one of the secured creditors was not a creditor.  In that case its consent was not sought or required. The fact that the court decided that HMRC’s consent was not required in this case makes perfect sense.  If a creditor is not actually a creditor, why should they need to consent – arguably it is wrong if they do.  This also reflects the view taken in Dear IP 168 that the status of creditor needs to be assessed in context.  If you actually have no creditors then there is no one in that class who can consent. 

Whether the court would take a similar approach if the position was reversed – all secured creditors had been paid but there was still a distribution to preferential creditors to be made – is a question for another day.  Paragraph 78 deals with the situation where a para 52(1)(b) statement has been given and the administrators do not think there will be a distribution to preferential creditors – in such a case, only the consent of secured creditors is required so the outcome in this case aligns with that.  However it does not deal with the reverse where secured creditors have all been paid.  Could an administrator proceed with the consent of the preferential creditors only – perhaps. 

No distribution to preferential creditors

In the other administration, the position was different.  Here the position changed from one where the administrators initially thought there would be a distribution to preferential creditors to one where there would not.

In reaching the conclusion that the consent of the unpaid preferential creditors was not required it seems that the judge looked at the wording of paragraph 78(2)(b) and the fact that the wording is framed in the present tense. 

Paragraph 78(2) says that the consent of preferential creditors is required if the administrator “thinks” (present tense) that there will be a distribution to preferential creditors. The court drew a distinction between the wording in paragraph 78(2)(b) and that in paragraph 52(1)(b) which is framed in the past tense – essentially allowing the administrators to decide at the time that consent to an extension was required, whether they still “thought” that there would be a distribution to preferential creditors.

As both of these scenarios demonstrate, the court was willing to take into account that the factual position was not as originally thought at the outset and reflects that the circumstances of the administration can change.

Key points for practitioners

The decision supports that the identity of creditors whose consent is required should be assessed at the point an extension is sought, not solely by reference to the opening paragraph 52 statement.

The critical question is whether a creditor has a current economic interest in the outcome of the administration, indeed are they still or where they ever a creditor?

Administrators should ensure that their assessment is supported by up-to-date evidence and clearly explained in progress reports and internal decision-making. That assessment remains fact-sensitive and should be carefully evidenced, particularly where creditor interests have changed since appointment.

Conclusion

Although brief, CDI Realisations Limited reinforces the direction of travel in this area – that timing matters and that consent under Schedule B1 should reflect the realities of the administration as it stands at the point consent to an extension is required. However, this remains an area where practitioners should take care.

CDI Realisations is based on an oral decision and therefore does not carry much weight – another court on another day could come to an entirely different conclusion.  That said it does seem to follow the interest-based approach to creditor consent that Pindar, Toogood and Dear IP 168 takes.

[1] Re CDI Realisations Ltd [2025] 12 WLUK 462