If you read our weekly news round-up or see other stories about administration you’ll have seen the term “Notice of Intention” (NOI) to appoint administrators. 

For directors of companies contemplating safeguarding or restructuring their company, it’s a legal mechanism that’s a vital lifeline. But there’s sometimes confusion regarding legal obligations and the loss of control. 

Let’s explore what an NOI is, whether filing one formally commits a business to administration and what specific steps follow the filing. 

What is a Notice of Intention?

An NOI to appoint administrators is a formal document filed at court that declares a company’s plan to enter administration. Typically utilised when a business cannot meet its financial obligations and is technically insolvent but when directors believe there’s a viable opportunity to rescue the business or achieve a better result for creditors than immediate liquidation.

The primary advantage bestowed by the NOI is the insolvency moratorium. 

Once filed, the document creates an immediate legal shield around the business. This prevents creditors from beginning or continuing legal actions such as winding-up petitions, without the court’s permission. 

It effectively freezes the status quo, providing valuable breathing space for directors to consult with insolvency practitioners and their accountants to finalise a recovery and rescue plan.

Does an FOI formally commit a business to administration?

This is a commonly asked question for directors who want the protection but are hesitant to hand over control.

Technically, filing an NOI doesn’t mean the company is instantly in administration. It triggers an interim period of ten business days when the company enjoys protection from creditors before an administrator is formally appointed.

However, this doesn’t mean you should use an NOI as a stalling tactic without a plan. 

The courts require that there is a genuine intention to place the company into administration. There are legal precedents (JCAM v Davis Haulage) establishing that there must be a real intention to appoint; the process cannot be used solely to buy time to look for other options or purely to block creditors.

If you file an NOI but fail to appoint an administrator within the ten day window, the moratorium expires. 

While it’s possible to file a subsequent notice, courts may view repeated filings as an abuse of process unless there’s clear evidence that a viable solution, such as a sale or imminent refinancing, are forthcoming.

The NOI Process: who files what and when?

An NOI can be filed by the company, its directors or a Qualifying Floating Charge Holder (QFCH) – usually the company’s bank or main lender. 

If a QFCH exists (if a bank holds a floating charge, for example), there is a specific procedural step that must be followed:-

  • The 5-Day Rule: You must provide at least five business days’ written notice to the QFCH before filing the NOI at court.
  • Why?: This gives the lender the opportunity to object to your choice of administrator or appoint their own, although in practice, they rarely object if the directors have a clear and viable plan.

Next steps: What happens after filing?

The clock starts ticking once the NOI has been filed and the moratorium is in place. The typical timeline would look similar to this:-

  • The 10-day moratorium: You have 10 business days to finalise any rescue or restructure strategy. During this time, directors remain in control of the business but should work closely with a licensed insolvency practitioner (IP). No creditor can remove assets or enforce debts during this window without court approval.
  • Finalising the rescue plan: Directors and the IP often use this time to arrange a pre-pack administration. This involves negotiating the sale of the business and its assets to a buyer or newly formed company before the administrator is appointed. The sale is then completed immediately upon the administrator’s appointment, preserving jobs and business continuity.
  • Appointing the administrator: Before the 10 business days expire, the directors or the QFCH will formally appoint the administrator. Once appointed, they will take control of the company and the directors’ executive powers cease, although they must assist the administrator.
  • Seeking an extension: If a deal is close to completion but not quite ready when approaching the end of the 10 days, then you can apply to the court for an extension of the moratorium. However, this extension must be justified as being in the best interests of the creditors as courts generally don’t grant them lightly.

A Notice of Intention is a powerful tool that provides a crucial window to potentially save a business and stop aggressive creditor action. 

While it doesn’t place a business into administration immediately, it signals a serious commitment to a formal insolvency process. It should only be utilised following specific advice from an insolvency practitioner to ensure it’s the right strategic move. 

Get in touch with us to arrange a free initial consultation at a convenient time – it can really make a difference for you and your business this year.