Administration

Administration is a formal insolvency process where an Administrator is appointed to protect company trade and assets, and to stave off debt recovery action/liquidation. The main purpose of Administration is to sell the business as a going concern rather than a closure and break up sale.

It is only applicable where there is a real prospect of selling the business and a greater return to creditors is expected than if the company were to be placed into liquidation.

Benefits

  • An Administration provides time for a business to become viable or marketed for sale whilst offering protection from some legal action
  • This procedure offers a measured return to creditors
  • While the company is under Administration there is a limit to legal actions that can be raised against it to recover debt due
  • Administration provides additional time to the company to restructure
  • Enables the survival of the business

Considerations

  • Funds are required to be put in place
  • May be more expensive than a pre-pack Administration
  • Legal costs will be incurred
  • Directors are no longer responsible for the running of the company
  • Trading can be impacted from publicity