What does administration mean for my business?

In short

If a company is in administration it means that the business has been protected by a Court order.  As a director, your powers end once the company goes into administration. However usually the administrator will need the directors’ co-operation and often delegate some authority to help keep the business running to rescue the business as a going concern and repaying and getting a better return for secured and preferential creditors.

In more detail

How does the process work?

If you’re new to this topic read our Brief Guide to Administrations to gain an understanding. The most common reason to go into administration is to protect a business and give it time to work out the best solution. This may mean an organised close down or it may result in selling all or part of the business to a new owner or the existing management.  It also means that the business is under the control of the licensed insolvency practitioner appointed by the Court acting as the administrator.

Once a company has entered administration, no creditor can take any action against the business without the Court’s or administrator’s permission. This includes all suppliers, retention of title creditors, financial companies, HMRC, business rates claimants, employees, banks, directors and shareholders.

What happens after?

The objective of administration is to protect the business whilst the best solution is worked out. This is usually decided within the first eight weeks.  The whole process normally lasts for up to 12 months but can be extended with creditor approval for a further six months or with the Courts approval for a further twelve months.

Sometimes the problems are resolved and the company is handed back to the directors. In other cases it may mean the business is sold and the remainder liquidated. Your directors’ powers end when the company has gone into administration.  Usually the arrangement is for you to both work together to get the best outcome for all.

If you have any choice in who is appointed as Administrator we recommend meeting or talking with them first. You should also discuss with them the plan of action once they are appointed. If you would like to know more about Administration and whether it is right for your business contact us today on 0800 331 7417 or complete the form below.

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