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What does Administration mean for my business?

The quick answer

If a company is in Administration it means that the business has been protected by a Court order with the objective of:

  • Rescuing the business as a going concern or,
  • Getting a better return for creditors than liquidation or,
  • Repaying secured or preferential creditors.

As a director, your powers end once the company goes into Administration. However usually the Administrator will need the directors cooperation and often delegate some authority to help keep the business running.

In more detail

HOW DOES THE PROCESS WORK?

If you’re new to the topic, read our simple guide to get your head around the subject first. 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, HM Revenue and Customs, business rates, employee claims, 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 12 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 director’s 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.

A WORD OF ADVICE

If you have any choice in who is appointed as Administrator I would recommend meeting or talking with them first to make sure you get on. 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 you, contact us today.

tip

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.
We have just worked with Kirks to complete the closure of our company. Everything went smoothly and professionally. I would recommend this firm and the staff who were very very helpful and quickly finalised everything. Thank you Kirks.
Carol Hill

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David Kirk

Licensed Insolvency Practitioner