Company Administration
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.
Full legal protection from all creditors whilst you and Umbrella.UK Insolvency formulate a strategy in respect of the company’s future affairs.
Directors or third parties have an opportunity to buy back the business as a going concern.
Gives the company breathing space whilst a restructuring plan is implemented.
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.
The Company Administration Process
Entry Routes
A company can enter administration through:
- Court order
- Appointment by a qualifying floating charge holder (e.g., bank or invoice provider)
- Appointment by the company or its directors
Legal Protection
- Administration stops legal action against the company unless the Administrator or Court allows it
- Creditors cannot pursue claims while the company is in administration
Purpose of Administration
The Administrator acts in the interests of all creditors to:
- Rescue the company as a going concern, or
- Achieve a better result for creditors than liquidation, or
- Realise assets to distribute to secured or preferential creditors
Pre-Pack Administration
- Assets are sold under a pre-agreed deal on the appointment of the Administrator
- Preserves value, protects goodwill, and helps employees retain jobs
- Creditors are informed why a Pre-Pack is used
After Administration Appointment
The Administrator’s duties include:
- Notify relevant parties and communicate with creditors
- Deal with secured creditors
- Manage the business while seeking a purchaser
- Handle the sale of assets
- Assist employees with redundancy claims
- Manage company pension schemes
- Prepare proposals and reports for creditor approval
- Report on directors’ conduct to authorities
- Agree creditor claims and make distributions
- Prepare statutory reports and close the administration efficiently
- Handle all company paperwork
