If your company is experiencing creditor pressure but the underlying business is viable then you should consider using a Company Administration procedure to deal with the company’s affairs.

Company Administration is a formal procedure in which an Insolvency Practitioner can be appointed to take control of the company’s affairs whilst a plan to rescue, sell or liquidate the company is prepared.

When is Company Administration appropriate?

• The company is facing severe cash flow pressures but the underlying business is viable
• The company is facing legal action but time is needed to consider all options
• The company is insolvent and the directors are concerned about the risks of wrongful trading

See the process for Administration below.

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Process for Company Administration

How does a company go into Administration?

There are three entry routes into administration in England:

• By an order of the court;
• Appointment by a qualifying floating charge holder (usually the company’s bank or invoice provider); and
• Appointment by the company or its directors.

But my company is being sued by a creditor? Is Administration still available to me?

Administration stops any legal action or process against a company from proceeding, unless the Administrator or the  Court give permission.  This means that creditors can’t take legal action against a company in administration to recover outstanding amounts.

What is the purpose of the administration?

An Administrator must perform his functions with the objective of:

• Rescuing the company as a going concern, or failing that;
• Achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (liquidated) (without first being in administration), or failing that;
• Realising property in order to make a distribution to one or more secured or preferential creditors.

The Administrator must perform these functions in the interest of the company’s creditors as a whole.

What is a “pre-pack” administration?

A pre-pack is a shortened form of the phrase “pre-packaged administration”.  A pre-pack is a deal agreed in principle prior to insolvency to sell the assets of a failed company, and is then  completed upon the appointment of the Administrator.

A pre-pack can ensure a smooth transition with enhanced realisations for creditors, the preservation of value for goodwill and the brands of the business, and company employees retaining their jobs.

If a pre-pack is applicable in an administration where you are a creditor, you will be sent information on why the pre-pack was used when you are notified of the appointment.

Once the Administration appointment has been made

The Administrator’s powers are very broad. Once appointed, we can hold your company together while plans are formulated to rescue the business, maximise asset realisations, or put forward alternative options.

Our duties will include:

• Notifying all relevant parties about the Administration appointment.
• Communicate with all creditors from start to finish.
• Dealing with any secured creditors.
• Managing the business while seeking a purchaser.
• Dealing with the sale of assets.
• Assist employees in submitting their claims to the Redundancy Payments Service.
• Dealing with any company pension scheme.
• Preparing proposals and reports for approval by creditors.
• Submit a report to the Secretary of State for Business Innovation and Skill on the conduct of directors.
• Agree creditors’ claims and make distributions to creditors
• Prepare all statutory reports and take steps to close down the Administration in a timely fashion.
• Deal with all paperwork relating to the Company.