New enquiry – Call David or Dan on 0808 1961496 or click on their name to email them a question

What is Administration?

Administration is a fast legal process that protects your limited company or partnership by order of the Court. Once the process has started, no legal action can be taken against the business or any assets removed without the Courts approval or that of the insolvency practitioner appointed as administrator to oversee the business.

ADMINISTRATION IN DETAIL

Administration should achieve one of three statutory objectives. These are:

  • To rescue the company as a going concern (which means placing the business in short term protection until it can be handed back to the directors)
  • To achieve a better result than the company being wound up (better than the business just going into liquidation first)
  • To realise security to pay off preferential or secured creditors (the methods the banks use to appoint an administrator)

One of the most useful aspects of Administration is that it’s very fast to get into and can be done without notifying creditors or shareholders. Once the formal process has begun, the business is protected. It is then up to the appointed insolvency practitioner (usually with the help and input of the directors) to decide what to do next. In no particular order, this may be one or more of the following:

  • Reduce the staff head count and close any unprofitable branches or divisions
  • Keep trading to finish any incomplete work to maximise value
  • Try to sell all or part of the business to a new owner
  • Sell assets and stock to realise funds to pay creditors

Within eight weeks of the date of the Administration order, the administrator will write to all creditors and set out their proposals (in a written report). They may then call a meeting of creditors within two weeks of that report to discuss the proposals and vote on the outcome. The administrator has to call a meeting if more than 10% of creditors (by value) request one. The outcome of the meeting may be; carry on realising assets, move to liquidation or a company voluntary arrangement, dissolution or even a return to the directors if the business is now solvent.

“When in Administration, no legal action can be taken against the business or assets removed without the Courts approval or that of the insolvency practitioner appointed as administrator to oversee the business.”

A Word of Advice on Administrations

Administration is a very fast way of protecting a business in trouble. The application to appoint an administrator can be made by:

  • The directors
  • The company itself
  • Creditors
  • Shareholders
  • A bank or lender with a floating charge (also known as a debenture)

If you would like to know more about administration and whether it is right for you, contact us today.

Back

Latest from Twitter Latest from Twitter

Sorry...

We can't load in our latest Tweet from Twitter right now
Please check back later or visit Twitter


Connect with us on LinkedIn Connect


Receive our email newsletter

Email Newsletter

Enter your details to receive regular updates from Kirks.

Don't worry, we don't use your details for any other purposes so you won't receive spam from any third parties.

×

Request A Callback

Simply fill out the short form and one of our team will get back in touch with you at your convenience.

Your Name (required)

Your Email

Telephone (only if we should call you)

Best time to call

Nearest town or city?

Please email me

×