Administration is a procedure aimed at rescuing a company in financial distress or, if that’s not feasible, creating a better result for creditors than would have been the case from liquidation. It may also be used as a last resort for realising assets for preferential and secured creditors.
In administration, the company has protection from its creditors whilst it is controlled by an Administrator (who must be a licensed insolvency practitioner) who look to achieve the best outcome for the creditors of the company.
Administration is usually best suited to more substantial companies whose businesses will attract investment and where it is important to preserve key employees and the goodwill of the business. Sometimes it is best to pre-package the business for sale in order to reduce damage to the future prospects and achieve the best value. We can help explore all the options and explain the implications of the available alternatives.
If the directors or shareholders do not deal with the company’s affairs in a timely manner, then a secured creditor with a debenture can put the company into Administration, or an unsecured creditor can apply to Court for an Administration Order. It is always best to get advice at an early stage to avoid such creditor action.