Company administration
Company administration is a court recognised insolvency process that places an insolvent company under the control of a licensed insolvency practitioner, who acts as administrator. From the moment it begins, a statutory moratorium holds off most creditor action, which gives the administrator time to try to rescue the company or to secure a better result for creditors than an immediate winding up would. It is used when a business is in serious financial difficulty but still has value worth protecting, whether as a going concern or through an orderly sale of its business and assets.
If your company can be sold as a going concern, or can benefit from continuing to trade to complete existing contracts and work, an administration order may be appropriate. Speaking to a licensed insolvency practitioner early gives the directors the widest set of options and can protect them from personal liability.
Last Updated: 12/08/2026
What is company administration?
Company administration is a formal insolvency procedure under the Insolvency Act 1986 in which an insolvent company is placed under the management of an administrator, who must be a licensed insolvency practitioner. The administrator takes control of the company and works towards one of three statutory objectives, with rescuing the company as the first aim. A statutory moratorium protects the company from most legal action by creditors while the administrator assesses the position and proposes a way forward.
The process is designed to help a company in financial distress by providing temporary relief from creditors and giving the administrator time to propose a solution to the company’s financial issues. It can be entered quickly, and it is one of the main rescue routes available to a viable business under pressure. For a plain English explainer of the term itself, see our answer on what administration is.
What is company administration for? The three statutory objectives
Administration exists to achieve one of three statutory objectives, which the administrator must consider in order. The first is to rescue the company as a going concern. If that is not reasonably practicable, the second is to achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up. If neither is achievable, the third is to realise the company’s property to make a distribution to one or more secured or preferential creditors.
- Rescue the company as a going concern: keeping the company itself alive, restructured and able to trade on.
- A better result for creditors than winding up: where the company cannot be saved, using administration to return more to creditors than an immediate liquidation would, often by selling the business as a going concern.
- Realise property for secured or preferential creditors: where neither of the above is possible, realising assets in an orderly way to pay those creditors.
The objectives are hierarchical. An administrator cannot move to a sale or a wind down simply because it is faster; they must be able to show why a higher objective was not reasonably practicable.
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What protection does the administration moratorium give?
A statutory moratorium takes effect as soon as a company enters administration, and during the interim period once a notice of intention to appoint an administrator is filed. In general terms it means creditors cannot start or continue most legal action against the company, enforce security, or repossess goods, without either the administrator’s consent or the permission of the court. This is the breathing space that makes administration a rescue tool rather than simply a way to wind a company down.
In practice the moratorium halts steps such as a winding up petition proceeding, enforcement or execution against company property, and the repossession of goods held under hire purchase or retention of title, unless consent or court permission is given. It does not cancel the underlying debts, and some limited actions can still proceed, so the protection is real but not absolute. The point of the pause is to preserve value while the administrator assesses whether the company, or its business, can be saved.
When might company administration be appropriate?
Administration tends to suit a company with a larger business that is insolvent or heading that way but still has a viable business or valuable assets worth protecting. It is often the right route when creditors can no longer be persuaded to wait, when there is a need to act quickly, or when keeping the business intact will produce more for creditors than breaking it up.
- When it is no longer possible to persuade creditors to support the company any longer.
- When cash flow pressures are building but there is still a potentially viable business to save.
- When there is a need to move quickly to sell the business and assets.
- When the company is insolvent and, by keeping it intact and acting quickly, creditors can benefit.
- Directors can now choose their own administrator to work with, rather than waiting for a bank or another creditor to impose one.
Pre-pack sales tend to suit situations where time is critical, where the core value of the business might otherwise dissipate, or where there is a danger of losing key staff or client relationships through uncertainty. These require careful, expert handling.
How does a company enter administration?
A company can be placed into administration in three main ways: by a decision of the directors, by the holder of a qualifying floating charge (typically the company’s bank), or by a creditor or shareholder applying to the court. Directors can appoint an administrator by filing the right documents at court, they choose the licensed insolvency practitioner willing to act who must be satisfied the statutory objectives can be met.
Where the company has granted a floating charge, for example through a debenture to a bank, the directors must give the charge holder five days’ notice of their intention to appoint an administrator. During that period the charge holder can appoint its own administrator instead; if it does not, the directors’ choice is appointed by them filing a document in court. Directors cannot use the out of court route once a winding up petition has been presented, in which case an application to court is needed. Administration is also a route where the board of an insolvent company cannot agree on a way forward, since it brings in an independent office holder to take control. For a step by step overview, see our answer on how company administration works.
Company administration vs pre-pack administration
While traditional company administration focuses on stabilising the business and exploring all routes to rescue or realise value for creditors, a pre-pack administration can offer a quicker sale of the business or its assets immediately after an administrator is appointed. At McTear Williams & Wood, we can advise whether a pre-pack sale might preserve value more effectively for your stakeholders, or whether a full administration process is more appropriate for your company’s circumstances.
Learn more about how pre-pack administration works and whether it could be the right solution for you on our pre-pack administration page.
Free advice line for distressed company directors > 08003317417
How is administration different from liquidation and a CVA?
Administration is primarily a rescue and restructuring process: the company continues to exist, often keeps trading, and may survive or be sold as a going concern. Liquidation is a terminal process that ends with the company being wound up and dissolved once its assets have been realised and distributed. A company voluntary arrangement, or CVA, is a binding agreement to repay creditors over time while the directors stay in control, supervised by an insolvency practitioner.
Administration compared with liquidation
Liquidation, whether a creditors’ voluntary liquidation or a compulsory liquidation, closes the company down. Administration aims, where possible, to keep the company or its business alive, with the moratorium giving the time to do so. A company in administration can still move into liquidation later if rescue is not achievable, which is why the two are often discussed together but serve different purposes.
Administration compared with a CVA
A company voluntary arrangement lets a company that can still trade profitably propose a structured repayment to its creditors, who must approve it by the required majority. Control stays with the directors, supervised by an insolvency practitioner, and there is no administrator running the business. Administration, by contrast, transfers control to the administrator and brings the moratorium with it. The two can work together: an administration is sometimes used to put a CVA in place where the company needs protection while terms are agreed.
Contact us now, in confidence, to speak with us about voluntary administration or to get help and advice on voluntary administration. Feel free to give us a call on 0800 331 7417 or email us info@mw-w.com.
Who runs a company in administration, and what changes for directors?
Once an administrator is appointed, they take control of the company’s affairs, business and property, and the directors’ powers are suspended. Directors remain in office and have a legal duty to cooperate, to hand over records and to provide a statement of the company’s affairs. They cannot make management decisions or deal with company assets without the administrator’s agreement.
The administrator acts in the interests of creditors as a whole and manages the company towards the statutory objectives, including decisions on trading, asset sales and creditor negotiations. The administrator also reports on the conduct of the directors, including the way a board behaved in the run up to insolvency. Directors who act early and take advice are in a stronger position than those who delay. Our Director’s Guide to Company Insolvency sets out what directors should expect and the duties that apply.
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What are the possible outcomes of administration?
Administration can end in several ways. The company may be rescued and handed back to its directors to continue trading. Its business and assets may be sold as a going concern, sometimes through a pre-pack sale arranged before the administrator is appointed. The company may exit through a CVA, or it may move into liquidation so that remaining assets are distributed to creditors, or move into dissolution.
- Company rescue: where the business is restructured and survives, the company can be returned to the control of its directors.
- Sale as a going concern: the business and its assets are sold, preserving value, jobs and trading relationships. Where speed is critical, this may take the form of a pre-pack. Learn how this works on our pre-pack administration page.
- A company voluntary arrangement: administration is used to agree a CVA that lets the company trade on under an agreed repayment plan.
- Liquidation: if rescue or a better outcome is not achievable, the company moves into liquidation if there are funds available for unsecured creditors.
- Dissolution: if there are no funds available for unsecured creditors.
When funds are distributed, creditors are paid in a set statutory order: fixed charge and other secured creditors first, then preferential creditors, then floating charge creditors, then unsecured creditors. Certain taxes the company collects on HMRC’s behalf, such as PAYE, employee National Insurance and VAT, rank as secondary preferential; the rest of what is owed to HMRC ranks as unsecured.
Businesses for sale
Sometimes there is a need to sell the business and/or assets arising out of an administration and you can find out more about businesses for sale both from McTear Williams & Wood and other insolvency practitioners at the UK’s leading insolvent business and asset website www.ip-bid.com – this is the UK’s online marketplace for buyers and sellers of businesses in distress.
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How McTear Williams & Wood can help
Administration is one of several business rescue options we advise on, and one of the more involved insolvency procedures, because the business often keeps trading and the administrator carries statutory duties throughout. Our team has handled administrations across many industries and, where possible, works with directors and existing management to pursue the best available outcome. We act as licensed insolvency practitioners regulated by the ICAEW.
We understand that directors worry about cost and personal exposure. In all our cases the administrator’s fees are met from the realisation of the company’s assets rather than from directors personally. The cost of an administration reflects the size and complexity of the case rather than any fixed price, and how fees are set, approved and paid is explained in our guide to charge out rates and insolvency fees. The first conversation is free.
A specific situation always needs a conversation with a licensed insolvency practitioner, who can look at your company’s position and explain the realistic options. You can arrange free initial advice or call our team in confidence on 0800 331 7417.
Frequently asked questions
What does going into administration mean?
Going into administration means an insolvent company is placed under the control of a licensed insolvency practitioner, the administrator, and is protected by a statutory moratorium that holds off most creditor action. The directors step back from day to day control while the administrator works towards rescuing the company or achieving a better result for creditors than winding up. It is a formal, court recognised process, not an informal arrangement.
What happens to staff when a company goes into administration?
Staff should be told about the situation as soon as practicable, and the administrator becomes responsible for handling employment matters during the administration, including wages incurred while they are in office. If redundancies are necessary, they must follow employment law and respect employees’ rights. Where the business is sold, the TUPE regulations may apply, so that affected employees transfer to the buyer.
Who runs a company in administration?
The administrator runs the company. They must be a licensed insolvency practitioner, and on appointment they take control of the company’s business, property and affairs. The directors remain in office but cannot exercise their management powers without the administrator’s consent, and they have a duty to cooperate and to provide information.
Can a company come out of administration?
Yes. Administration can be a temporary process with a defined end. A company can come out of administration by being rescued and returned to its directors, by exiting through a company voluntary arrangement, by moving into liquidation, or by being dissolved once the administrator’s work is complete. Which route applies depends on whether the statutory objectives can be met.
How long does administration take?
Administration is designed to last no longer than one year, but it can end sooner if the objective is achieved, or run longer in larger or more complex cases. Creditors can agree an extension, and the court can extend the period further. How long it takes depends heavily on the chosen outcome; a pre-pack sale, for example, can complete very quickly.
How much does company administration cost?
There is no fixed fee for an administration. The cost reflects the complexity of the case, how long the company trades during the process and the work the statutory duties require, which is why administration is often one of the more involved procedures for an SME. Fees are usually drawn from the realisation of company assets, and how they are set and approved is governed by professional rules. We will explain the likely basis of costs at your free initial consultation.
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