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Administration – What You Need To Know

Administration is a legal process that gives short term protection to a company that is insolvent so it can be completely sold, just the profitable parts sold or wound down in a more organised manner than liquidation. In Administration a Licensed Insolvency Practitioner (“IP”) is appointed by the Court to oversee the company finances.

Often the IP is chosen by the directors (and sometimes a secured lender such as a bank) and continues to work with the directors to achieve a better outcome.

An Administration Order can be obtained very quickly and can happen on the same day if there is no debenture. If a lender has a debenture (you can find out if you have one by checking Companies House) they must be given five business days notice of your intention to appoint an Administrator.

A qualifying floating charge holder (usually a bank with a debenture) can appoint an Administrator immediately with no notice to the company although in most cases the directors will be given some warning this is about to happen. The bank in most cases would serve a final demand for repayment of the loan first.

Administration is usually used when companies are under financial pressure and need space to consider their options. The outcome maybe a Pre-Pack Administration.

A creditor can also apply to Court for an Administration order. This can be done quite quickly in and usually within a few days. This is sometimes used to resolve shareholder deadlock as one shareholder maybe a creditor.

Sometimes and in smaller cases an easier option than Administration is to just close and liquidate. The business can still be sold and transferred to a new owner.

One issue with Administration is that normally all employees rights transfer to the new business owner. This can have a major impact on the price a buyer is willing to pay.

Click on the following articles to find out more.

We Are Local

For an initial free consultation regarding Administration or to find out more about our related services, please contact us.

We have offices throughout the South of England including: Exeter, Barnstaple, Bristol, Glastonbury, Hereford, LondonPoole and Swansea and offer free initial consultations with our insolvency specialists and liquidators. If you are unable to get to our offices, we can come to you. Contact us to find out more.


With 25 years' experience of dealing with insolvency
we know its important for us to put you first.
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