Administration
Written by Nicholas Barnett, Director of Libertas Associates
Administration is an insolvency recovery procedure that is utilised to achieve one or more of the following three objectives:
- Rescuing the Company as a going concern, or
- Achieving a better result for the Company’s creditors as a whole than would be likely if the Company were wound up (without first being in administration), or
- Realising property in order to make a distribution to one or more secured or preferential creditors.
On entering into Administration there is an immediate moratorium (lasting for twelve months subject to extension) which provides immediate protection from Creditors, allowing an Administrator time to manage/trade the business in an orderly fashion in an attempt to achieve the objectives as above. Amongst other things, the moratorium:
Protects the Company from any legal action being instituted or continued. Dismisses any existing winding-up petition. Prevents a landlord from effecting peaceful re-entry. Prevents the repossession of HP goods.
Once the Company is in Administration, responsibility of the assets and liabilities transfers to the appointed Administrator. The Director(s) can remain in office (although they could also be removed), but their responsibilities would be clearly defined by the appointed Administrator.
The manner in which a Company enters into Administration varies and is dependent on numerous factors, which include but are not limited to; who the appointer is, whether there are any charges registered against the Company and whether there is an outstanding winding-up petition/ extent of creditor pressure.
An Administration can be instigated by any of the following (subject to certain preconditions); the Director(s), the Company, a Qualifying Floating Chargeholder, the Supervisor of a Company Voluntary Arrangement (“CVA”) or a Creditor.
The information above, is a brief description of the Administration process. For more information and to get specialist advice from a firm of Licensed Insolvency Practitioners, please do not hesitate to contact us or click on the following link for more information.
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