When professional pressures collide: a case study in administrator removal: BTI2014 LLC & Anor v Finbarr O’Connell & Ors [2025]

BTI2014 LLC & Anor v Finbarr O’Connell & Ors [2025] EWHC 2115 (Ch)

Key points

• The removal of administrators represents one of the most challenging decisions courts encounter in insolvency proceedings. It requires balancing the practical need for continuity against legitimate concerns about professional independence.
• In BTI 2014 LLC & Anor v Finbarr O’Connell & Ors [2025] EWHC 2115 (Ch), Deputy High Court Judge Simon Gleeson navigated these competing considerations in a case that offers valuable insights into when conflicts of interest become unmanageable and how professional pressures can escalate into untenable situations.
• The case serves as a valuable reminder that conflicts of interest, however they arise, must be managed with complete transparency and appropriate humility. Where conflicts cannot be properly managed without fundamentally compromising the office-holder’s role, removal may be necessary to preserve confidence in the process.

The environmental legacy challenge

The factual background reveals the complex corporate archaeology that modern insolvency practitioners often inherit. Windward Prospects Limited found itself at the centre of environmental liabilities stretching back to 1978, when BAT Industries PLC (BAT) acquired paper-making facilities that had caused significant pollution to US rivers. The subsequent web of indemnities – from BAT to NCR upon acquisition, then from Windward back to BAT upon demerger in 1990 – created a chain of obligations that would eventually generate claims approaching $600m (para 11).

The situation was complicated by Windward’s payment of substantial dividends to Sequana SA in 2008-2009, just as environmental claims were crystallising. These payments, which featured in the Supreme Court’s landmark Sequana decision on director duties, left Windward unable to meet its environmental obligations. The various parties eventually resolved their disputes through a complex 2014 Funding Agreement, under which BAT would fund environmental remediation through BTI 2014 LLC (BTI) whilst Windward remained liable for reimbursement subject to a “Windward Floor” of $25m (paras 13-15).

This intricate structure meant that when joint administrators Mr O’Connell and Mr Hardman were appointed in October 2018, they faced the challenging task of maximising recoveries from a company with substantial liabilities but limited realisable assets beyond potential claims against former directors.

The emergence of competing duties

For nearly six years, the administration proceeded along conventional lines, with the administrators pursuing director misfeasance claims valued at approximately £150m. The conflict that would ultimately prove decisive only came to light in September 2024, when BAT’s solicitors reviewed the directors’ defence papers and discovered that O’Connell had previously advised those same directors on the transactions being challenged (para 114).

The directors asserted they had relied on O’Connell’s advice that the disputed share transfers were “permitted” and that “directors were not expected to work for nothing” (para 77.2). This placed O’Connell in an extraordinarily difficult position: successfully pursuing the claims might require arguing that his previous advice was incorrect, whilst the directors’ reliance on that advice could provide them with a defence.

The judge recognised the genuine difficulty this created, noting that O’Connell faced competing duties that could not easily be reconciled (para 72). This was not a conflict that arose from any deliberate wrongdoing but from the complex circumstances of modern corporate restructuring, where the same professional advisers may find themselves involved at different stages of a company’s lifecycle.

Responses under pressure

The administrators’ response to this conflict became the focus of the removal application. Faced with a challenge to their continued appointment, they adopted several defensive strategies that the judge found increasingly problematic.

The first was to dispute the creditor status of BAT and BTI – entities they had previously acknowledged as majority creditors representing over 90% of claims by value. The timing of this challenge, emerging only after the conflict was discovered and removal threatened, was particularly concerning to the court (paras 115, 121).

The judge noted that O’Connell had been on extended sick leave in late 2024, which may have affected his judgement when composing a series of emails in early 2025 that contained serious allegations against BAT and its solicitors, including suggestions of blackmail, tax avoidance, and money laundering (paras 130-134). The judge observed that these communications were “sufficiently far outside what might ordinarily be expected” whilst acknowledging the pressures the administrators faced (para 136).

The limits of conflict management

The administrators proposed managing the conflict through the appointment of “conflict administrators” to handle the problematic aspects whilst they continued with other duties. However, this mechanism, effective in many multi-company insolvencies, deserved careful consideration.

The judge’s analysis revealed the scope of functions that conflict administrators would need to assume: conducting the director claims, investigating potential claims against O’Connell’s firm, adjudicating the major creditor proofs, and managing potential fraudulent trading claims (para 90). His conclusion was that “once Conflict Administrators had been appointed, and the scope of their mandate had been appropriately determined, there would be almost nothing left for the existing Administrators to do” (para 93).

This finding was crucial. The judge drew on established authority that conflicts can often be managed through appropriate mechanisms, but recognised that where a conflict is so pervasive that managing it would effectively strip the original office-holder of all meaningful functions, removal becomes the more appropriate solution (para 88).

Professional standards and public confidence

The judge emphasised that his decision was “absolutely not a finding of wrongdoing in the past, nor is it a finding that there is a likelihood of wrongdoing in the future” (para 136). Instead, the test focused on whether the administrators’ conduct had raised legitimate concerns about their ability to discharge their duties independently going forward.

This forward-looking approach reflects the court’s role in protecting the administration process rather than punishing past conduct. The judge recognised that professional reputation and standing are important considerations, noting the impact removal would have on the administrators’ careers whilst concluding that this could not override the paramount need to maintain confidence in the administration process (paras 182-184).

The weight of creditor opinion

An important aspect of the decision concerns the role of majority creditor wishes. BAT and BTI represented at least 93% of creditors by value, with remaining creditors showing no interest in the disputes (para 58). The judge considered whether such overwhelming creditor sentiment should be determinative.

His analysis balanced creditor democracy against judicial oversight. Whilst majority creditor wishes are relevant, they cannot override the court’s supervisory role.

“Even a large majority of creditors should not be able to keep a clearly defective administrator in post”,

the judge observed, whilst equally,

“no majority of creditors, no matter how large, should be given the right to remove an administrator without showing good cause.” (para 62)

This approach respects both the commercial realities of insolvency proceedings and the constitutional role of the court in supervising its officers.

Implications for practice

The decision offers several important lessons for practitioners facing similar challenges.

First, conflicts of interest must be identified and addressed promptly. The judge noted the importance of recognising potential conflicts early, drawing on criticism from similar cases where administrators had failed to appreciate their conflicted position sufficiently quickly (para 78).

Second, the case demonstrates that whilst conflict administrators can be effective tools for managing specific conflicts, they cannot cure situations where the conflict is so fundamental that no meaningful role remains for the original office-holder. Practitioners must realistically assess whether proposed management mechanisms will genuinely resolve conflicts or merely disguise their extent.

Third, the decision highlights how professional pressures can escalate situations beyond their original scope. What began as a conflict of interest developed into concerns about professional judgement under stress. This underscores the importance of maintaining perspective and seeking appropriate advice when facing challenging situations.

The future-focused test

Perhaps the most significant aspect of the judgment is its emphasis on prospective rather than retrospective assessment. The test is not whether past conduct was blameworthy but whether it raises reasonable concerns about future independence and effectiveness.

This approach recognises that removal serves a protective rather than punitive function. It acknowledges that good professionals can find themselves in impossible positions through circumstances beyond their control, whilst maintaining that the administration process must be conducted by those who can act with complete independence.

Conclusion

BTI 2014 LLC v O’Connell illustrates the complex pressures facing insolvency practitioners and the courts that supervise them. The decision demonstrates judicial recognition of the genuine difficulties practitioners face whilst maintaining clear standards for professional conduct.

The case serves as a valuable reminder that conflicts of interest, however they arise, must be managed with complete transparency and appropriate humility. Where conflicts cannot be properly managed without fundamentally compromising the office-holder’s role, removal may be necessary to preserve confidence in the process.

For the profession, the decision provides guidance on when conflict management mechanisms are appropriate and when more fundamental solutions may be required. It emphasises that the paramount consideration must always be the proper conduct of the insolvency process and the maintenance of public confidence in court officers.

The judgment’s balanced approach – recognising the human pressures involved whilst maintaining professional standards – offers a thoughtful framework for similar cases and confirms that even in the most challenging circumstances, the interests of the administration process must take precedence over individual considerations.

Article by Callum Reid-Hutchings – first appeared in the October issue of Corporate Rescue and Insolvency