When a company is placed into Administration (or Admin) the Company requires the court to confirm that the business is insolvent. This is granted to the company following an initial application to the court by either the company itself (by instruction of the shareholders), the Directors, a Qualifying Floating Chargeholder (“QFC”) or the Court itself.
Administrations must satisfy one of three statutory purposes, in order to be granted by the court or proposed with the assistance of an IP, these three purposes are:-
- Rescue the Company as a going concern or
- Achieve a better result for unsecured creditors than if the Company were put into Liquidation (wound up) or
- Realise property to enable a distribution to one or more preferential or secured creditors.
The Administration process is often used for companies with assets of a high value because the procedure allows for sales of these assets to be completed quickly and can include sales proceeds which are often not included or are lower in other processes (such as Goodwill).
The main advantages of Company Administration are…
- It is a court driven process and therefore the court offers protection to insolvent Companies from creditors either commencing or continuing with any legal actions, this is called a moratorium.
- Unless the Administrator or the court provide consent, the moratorium is likely to stop all actions, such as landlord distrait, repossessions by financiers, walking possessions and bailiff enforcement.
- It is usually a quick process & therefore this aids the logistics of completing a sale of the business & assets.
- The process allows for more business sales (particularly more on a going concern basis) usually meaning higher realisations, more employee jobs saved and better returns to creditors.
- The Company Directors are not required to attend the meeting of creditors although this meeting must be at a location convenient to creditors.
The main disadvantages of Company Administration are…
- If there are charge holders then notice of your intention to appoint an Administrator must be given to the charge holder plus a request for their consent. Charge holders may object to the Administrator’s appointment and this notice/consent process can also cause delays.
- It is not the cheapest insolvency process available as the level of works required to obtain appointment, complete on sales and file all documents required by the court & Registrar.
- The Directors of the insolvent company have no control over the Company once in Administration.
For more information about Bridge Newland’s Administration Services and Company Administration Advice please click on the link below which will enable you to download our free PDF guide.
FREE Guide to Company Administration
Please note: A standard company administration is not the same as a pre pack administration. Full details about pre-packs can be found on our Pre-Pack Administration page
However, in brief, a pre-pack is still an Administration (like above) but in the case of a pre pack the sale of the assets of the Company has been negotiated, and provisionally agreed, prior to the Administrator being appointed. The sale is then completed shortly after the appointment of the Administrator or upon him being appointed.
Bridge Newland Limited are experts in all administration services and company administration advice, and given our family setup we offer a personal service at a cheap rate. Therefore, if you need a company administration advice at the cheapest rate or want to find out more on each of our administration services, please call our free phone number on 0800 612 6197. All initial advice is free.