Administration is a process whereby a licensed Insolvency Practitioner takes control of an insolvent company at the instigation of either its Directors or secured Creditors. Whilst ever the Company remains in administration it is protected from litigation and creditors attempting to retrieve or seize assets to improve their position. The reason for this is to allow the Administrator to devise a plan to either try and rescue the Company, or at least achieve a better realisation of its assets than would be achieved in liquidation.
An Administrator is appointment by either:
- an order of the court;
- the holder of a floating charge; or
- by the company or its directors.
The Administrator’s primary goal is to rescue the company as a going concern.
If this is not possible, the secondary objective is aimed at achieving a better result for the company’s creditors than if the company were to be wound up. If neither of these goals can be obtained, the final aim is to realise the property in order to make a distribution to one or more preferential creditors.
No legal proceedings may be started or continued against a company in Administration except with the consent of the Administrator or the court.
The Administrators stay in office will last no longer than one year unless the duration is extended.
WHEN IS ADMINISTRATION APPROPRIATE
Where a Company is under significant pressure from creditors; who are looking to take enforcement action through the courts; instructing bailiffs to sieze assets; or looking to retrieve goods/vehicles/premises; administration throws a protective shield over the assets of the Company. This is particularly appropriate where there is a solid core business that has a good chance of survival.
One of the keys to a successful administration is the pre-planning that will take place between the Directors and Insolvency Practitioners. If the Insolvency Practitioner is looking to trade the Company in some form, they will want to ensure that cash flow forecasts demonstrate at least a break even situation otherwise they will be reluctant to take the appointment.
We have found that administrations work best where the Directors work closely with us in the vital first weeks following our appointment. How the initial trading is to be funded is a major consideration.
To talk to one of our specialist team members please call 0800 955 3595 and ask to speak to a member of our Advice Team who will be happy to discuss YOUR personal circumstances and help YOU decide which way is the best for YOUR Company.
