79th Group Proposals Rejected: Why Creditors Must Now Take Control

Loan note holders in the collapsed 79th Group companies have made their stance clear: the Administrators’ Proposals have been rejected. However, this is more than a procedural result, it’s a decisive moment that shows creditors are united, organised, and unwilling to accept vague promises or costly processes that don’t serve their interests.

So, what comes next? Creditors have rights, and now is the time to exercise them. Below are six key reasons why rejection was the right call, and what should happen from here.

1. Administration: Why the Statutory Purpose Cannot Be Achieved

By law, administration must serve one of three purposes:

• Rescue the company as a going concern
• Deliver a better return than liquidation
• Pay secured or preferential creditors

In the case of the 79th Group companies, none of these purposes apply:

• There is no viable business to rescue
• No meaningful assets exist that could improve outcomes over liquidation
• No realistic route exists to deliver returns beyond what liquidation would provide

Continuing in Administration does not serve creditors. Instead, it prolongs the process, increases costs, and risks draining value further, with those costs ultimately charged back to creditors themselves.

2. Liquidation: Why It’s the Right Process Now

At this stage, these Administrations offer no unique benefit. Significantly, everything the Administrators propose can just as effectively, and more efficiently, be achieved through a Creditors’ Voluntary Liquidation (CVL).

Here’s why liquidation is the right step forward:

• Accountability: Liquidators can pursue wrongful trading, misfeasance, and the recovery of misapplied funds.
• Efficiency: Liquidators can carry out the same investigatory work at a fraction of the overheads charged in the Administrations.
• Control: CVL removes the ongoing costs of the Administrations and places power firmly in the hands of independent liquidators.
• Dividend distribution: Liquidators pay dividends in liquidation, not administration, so creditors should move to liquidation sooner to cut costs.

In short, liquidation stops unnecessary spending and focuses resources where they belong, preserving as much value as possible for loan note holders.

3. Remuneration: Why Creditors Must Cap the Fees

This is your money on the line. Every pound spent on the Administrators’ fees is a pound less available for your recovery. Additionally, if costs spiral unchecked, creditors will once again be left at the back of the queue.

The Insolvency Rules give you, the creditors, the power to decide what the Administrators get paid. This is not a courtesy; it is your statutory right.

By setting a cap of £150,000 per company, you:

• Take control of costs before they run out of control.
• Stop the estate from being swallowed by professional fees.
• Force accountability and transparency at every stage.

Remember: the Administrators work for the creditors, not the other way around. Exercise your right to cap their remuneration and make sure your money works for you, not them.

4. Insolvency Work: Why It’s Better Done in Liquidation

Namely, the work described by the Administrators- tracing funds, investigating director conduct, and pursuing potential claims, can all be carried out in liquidation, and often more effectively.

• Liquidators are specialists. Their role is dedicated to winding-up companies and recovering value for creditors.
• They have stronger investigative powers. This allows for a fuller review of what went wrong and who may be responsible.
• Creditors gain more direct oversight. Through committees, creditors can guide priorities and ensure efforts are aligned with their interests.

For this reason, moving into liquidation now avoids duplication, reduces costs, and ensures investigations are carried out with maximum efficiency.

5. Administration Exit: Why It Must Happen Within 28 Days

With the proposals rejected, prolonging Administration serves no useful purpose. A timely exit into liquidation is the logical next step. Setting a 28-day timeframe provides clarity and prevents further costs from accumulating.

This approach ensures:

• Administrator fees are limited.
• The process is not drawn out unnecessarily.
• Efforts can shift immediately to recovery and creditor claims.

Importantly, creditors have the right to insist on this transition and to nominate new independent liquidators. By doing so, they can take an active role in shaping the process and protecting their collective interest.

6. Creditors’ Committee: Why Representation Matters

A creditors’ committee is one of the most effective ways for creditors to stay involved in an insolvency. By law, the committee supervises fees, reviews decisions, and tracks progress. Moreover, it exists to keep the process transparent and focused on creditors’ interests.

Who creditors appoint determines the effectiveness of a committee. Representatives need to understand how the process works and be willing to scrutinise costs and challenge office-holders where appropriate.

Loan note holders may consider nominating experienced representatives. Insolvency & Law have named Rob Smith, Codie Gage, and Britena Clarke as suitable individuals. Their stated focus is on reviewing costs, testing proposals, and ensuring creditor interests remain central. This option is available without charge to loan note holders.

Important Note: Why Administrators Rarely Pursue Third-Party Recovery

Creditors should be clear-eyed about this: administrators are often reluctant to chase third-party recovery actions against directors, introducers, or advisers. Why? Because these claims, while potentially valuable for creditors, do not benefit the administrators directly.

Litigation is costly and carries risk. And crucially, some damages recovered through such actions fall outside the insolvent estate. That means they do not first pay administration expenses and fees. Instead, they flow strictly to the creditors involved, which can be via legal assignment of claim.

With little personal incentive, administrators tend to sidestep or downplay these actions. Therefore, this is why creditors must insist on strong committees and independent oversight, to make sure third-party claims are identified, pursued, and not quietly ignored.

What Next?

This is the moment for loan note holders to take control. By rejecting the 79th Group Administrators’ Proposals, you have already forced a new path forward. Creditors should approve the Proposals only when they include the following essential modifications (see the links to the respective company resolutions below).

1. Conversion to Liquidation (CVL)
The Administration must exit into CVL within 28 days. Independent liquidators will have the same powers to realise assets and make distributions, but without the drain of ongoing administrative costs. This preserves the maximum possible funds for creditors.

2. Fee Cap of £150,000
Unrestricted fees are one of the biggest threats to recoveries. By capping fees at £150,000 per company, creditors keep costs proportionate and prevent the estate from being consumed before they receive anything back.

3. Control of Remuneration
Creditors hold a powerful legal right under the Insolvency Rules 2016: you decide administrator remuneration. Exercise this right. Capping and controlling fees locks in accountability and ensures costs remain aligned with creditors’ interests.

4. Establishing a Creditors’ Committee
In fact, every company should have a Creditors’ Committee. This is your line of defence and it provides direct oversight of fees, progress, and decision-making. You can nominate Insolvency & Law as your proxy if you wish. This is a complimentary service, and your rights remain fully intact.

Finally

To sum up, if creditors reject the Proposals, even with the suggested modifications, the entire package falls away. Administrators cannot simply carry on business as usual. At that point, they must turn to the Court for directions.

And here is the crucial part: when the Court sees that the statutory purpose of Administration has failed, it will almost certainly order compulsory liquidation. That means the Companies will be placed into liquidation under new, independent office-holders.

For creditors, this is not a defeat, it is the very outcome you have been pushing for. Liquidators investigate directors, introducers, and advisers with stronger powers. They contain costs, increase accountability, and focus the process on creditor recoveries rather than administrator convenience.

By rejecting vague, costly proposals, you have already shifted the balance of power. Moreover, what comes next is a chance to secure proper oversight, press for recovery action, and ensure your voice is heard at every stage.

Above all, this is the moment to stand firm. Creditors have shown they will not accept half-measures. With unity and persistence, liquidation can deliver the accountability and transparency that loan note holders deserve.

Next Steps

• Please complete and return your voting form with the attached resolution for each 79th Group company (LL6, LL5, CM3).  We will check your form, collate and send to the respective Insolvency Practitioner. 
  
• If the Administrators refuse to accept the modifications, the resolutions will count as a rejection of their proposals.
  
• This strengthens creditors’ collective position and forces the matter toward liquidation with new officeholders, ensuring accountability and cost control.

To join coordinated creditor action, complete your forms today. You may either download the form, complete it, and return it by email to britena.clarke@insolvencyandlaw.co.uk, or simply complete the digital version online:

For more information on how to participate and co-ordinate with other creditors, contact Insolvency & Law at: info@insolvencyandlaw.co.uk.

Disclaimer: Insolvency & Law Ltd does not act as a firm of solicitors or as licensed insolvency practitioners. We do not carry out any regulated activities as defined under the Legal Services Act 2007 or the Financial Services and Markets Act 2000. All information and commentary concerning The 79th Group, including that published via our blogs and podcasts, is made available free of charge for informational and educational purposes only and should not be regarded as legal or investment advice.

In suitable circumstances, I&L may take legal assignment of loan notes issued by 79th Group companies and act in its own name and at its own cost and risk to pursue enforcement and recovery. Loan note holders assigning claims to I&L are not exposed to the cost of such action.