Company Administration

Company administration is a formal insolvency process where an insolvent, or contingently insolvent company, will be put under the control of a licensed insolvency practitioner, who will act as administrator. It functions as a holding stage during which company administrators will devise a viable route forward for the business.

A company in administration is protected from legal action by way of a moratorium, such as a winding up petition, which provides it with breathing space and time, while administrators ascertain the next steps.

Administration can rescue the company as a going concern, facilitate a sale to a connected or unconnected buyer, or realise assets to raise funds for creditors. Alternatively, the sale of the business may be agreed upon before the appointment of an administrator, this is known as pre-pack administration.

Administrator appointed – An administrator can be appointed voluntarily by the directors and shareholders of the company, or by secured lenders through the courts.

Next steps determined – Once an administrator is appointed, they will manage the company while they work out how to move forward with the business, such as:

• Sell the company out of administration
• Restructure the business and realise assets to raise funds
• Enter an insolvency procedure, such as a Company Voluntary Arrangement (CVA), if the business requires debt restructuring
• Enter a voluntary liquidation procedure, such as a Creditors’ Voluntary Liquidation (CVL), if the business is no longer viable
• Decide whether the company’s current directors will remain in control of the business throughout the administration, also known as trading administration

Company exits administration – Administration ends when its purpose has been achieved and the company is on a more secure footing.

To decide whether company administration is right for your business, here are the advantages.

• Administration offers a realistic chance of returning the business to profitability as the procedure is designed to promote business rescue, recovery and maximise creditor returns
• Protects the company from legal action by way of a moratorium while it is in administration
• Presents valuable time to use the expertise of a licensed insolvency practitioner to turn the company around
• Company administration can be entered without creditor approval

A licensed insolvency practitioner will be able to assess your company and advise whether administration or an alternative approach is suitable.

Begbies Traynor can help as we can accept appointments as Administrators. With more than 100 offices across the UK, stakeholders are never far away from expert advice. We can arrange a same-day consultation at your local office to discuss the best way forward.