Company Administration means a company is protected by a Court order and is being managed or run by a Licensed Insolvency Practitioner who is called the Administrator. Administration usually lasts for a period of one year. However, in the first few weeks the business is usually traded and reduced in size, sold or closed down.
Companies that go into administration are insolvent. This means either the liabilities exceed the assets or that the company cannot pay its debts as they fall due.
Once the appointment documents are filed in Court the company is protected by a moratorium until it goes into administration and no-one can take any legal action. The company normally goes into administration right away unless there is a debenture holder (normally the bank) who need to be given five clear business days' notice of the intention to appoint an Administrator. The bank may at this point choose their own Administrator - usually a larger firm.
Three reasons why a company can go into administration:
In a matter of hours compared to liquidation or a Company Voluntary Arrangement ('CVA') which can take weeks.
Once in administration no creditor can take any legal action against the company or recover goods. If the bank has a debenture, the administration will take at least give business days but in the meantime, the company is protected by a moratorium.
There can be a number of outcomes once a company goes into administration. These could be as follows:
Once in administration, the Administrator will write to all creditors and employees within a week and then report to all creditors and shareholders in full within eight weeks on his proposals. These proposals contain a full report of what happened, what assets the company owns, what it owes, the costs to date and the Administrator’s proposed outcome.
If you would like to know more about administration and whether it is right for you speak to one of our experts. If you need insolvency advice the earlier you talk to someone like us the better as you will have more options. We can help, contact us today on 0800 331 7417
If you would like to know more about administration and whether it is right for you speak to one of our experts.
If you need insolvency advice the earlier you talk to someone like us the better as you will have more options. We can help, contact us today on 0800 331 7417