Administration is an alternative to liquidation and is only available for companies who cannot pay their debts or are likely to be unable to pay their debts in the near future. It is intended as a rescue mechanism for a failing company, and because of this a company will usually be allowed to continue trading whilst in administration, so as to maximise the assets of the company. If a petition for administration is brought against your company, or you wish to bring a petition for administration, you would need to instruct an insolvency solicitor, as legislation in this area can be complex.
The administrator can be appointed by the court, on application by the creditors or the directors of the company. The administrator can also be appointed out of court by the holder of a qualifying floating charge over the assets of the business or by the company or its directors.
The advantage of administration is that there is a ‘moratorium’, or ‘freeze’, on actions brought by creditors. This gives the administrator time to rescue the company, if this is possible. The object of the administrator is firstly to rescue the company as a going concern, and if this is not possible the administrator will attempt to secure the best deal possible for the creditors of the company. If this is also not possible the administrator will sell the company’s assets for distribution to secured or preferential creditors.
If you would like to obtain legal advice on administration or advice about the options for a solvent or an insolvent company, Caven can put you in touch with a local specialist Insolvency Solicitor free of charge. So, if you have any questions or would like our help in finding local Insolvency Solicitors please call us on 08001 221 2299 or complete the web-form above.
- Last Updated on 01/02/2012