The administrator controls the company and its assets. Directors must cooperate and cannot continue to exercise management powers without the administrator’s consent. Administration restricts many forms of enforcement, but it does not erase company debts or automatically release personal guarantees. The effect on particular creditor action needs to be checked.
Company administration in England and Wales
Administration is a formal insolvency procedure in which a licensed insolvency practitioner takes control of a company as administrator. It can provide protection from certain creditor action while the administrator pursues the statutory purpose of the procedure.
BusinessRescueExpert assesses whether administration is appropriate, whether there is funding for the process and what alternatives are available. If the company is facing urgent creditor action, tell us about the deadline when you contact the team.
What administration is intended to achieve
The statutory objectives have an order of priority: rescuing the company as a going concern; achieving a better result for creditors as a whole than an immediate winding-up; or, in the circumstances permitted by law, realising property for secured or preferential creditors. A sale of the business does not necessarily mean the original company survives.
What changes for directors and creditors
Administration and pre-pack sales
A pre-pack administration involves arranging a sale before appointment and completing it on or shortly after the administrator is appointed. The administrator must assess the proposed sale and comply with the relevant legal and professional requirements. A pre-pack is one possible approach within administration, rather than another name for the whole procedure.
Special scrutiny rules apply to substantial disposals to connected persons within the first eight weeks of administration. The administrator needs either creditor approval or a qualifying evaluator’s report obtained by the connected purchaser, and must consider that report before the disposal. The evaluator must meet the eligibility and independence requirements. A report does not guarantee that a sale will proceed.
Costs and funding
Administration costs depend on the proposed work, assets, trading needs and complexity. They should be assessed for the particular case. A purchaser must also consider the purchase price, working capital and transaction costs. We will explain the proposed scope and fee basis; a liquidation estimate is not a quote for an administration.
What we need to assess the options
Bring recent accounts, current cashflow information, details of secured lending and other creditors, employee numbers, significant contracts and any court or enforcement documents. Explain any proposed purchase of the business or assets so it can be considered from the outset.
Where administration is unsuitable, we will explain the alternatives, which may include a CVA or CVL. Discuss your company’s position or call 0333 939 80 40.
For advice about a Scottish company, visit Lennox Insolvency.
Common questions about administration
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