What does administration mean?
For a viable company that’s struggling with company insolvency, a company administration can be a catalyst for change; a lifeline to corporate turnaround.
Company administration benefits
- The rescue process will potentially save jobs as well as protect directors from any exposure to wrongful trading risks.
- Frequently, as a result of corporate turnaround, organisations are better positioned to plan, manage and respond to future changes in their business environment.
- 6 benefits of choosing us for your Administration.
At its start..Company directors, creditors or floating charge holders can use an administration process to seek legal protection (statutory moratorium) from creditors pursuing the company; allowing a breathing space to rescue and restructure the business whilst achieving one of the purposes of an Administration:
- Rescue the company as a going concern, or
- Achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or
- Realising property to make a distribution to secured or preferential creditors.
As such an Administration may result in a share sale, a sale of the business and assets (including staff) to a new owner (and potentially result in the old company being liquidated – a CVL or dissolved) or lastly, disposal of the assets.
A ‘trading administration’ allows a company to operate whilst under the protection of administration. Thus contracts and orders can be completed, to the benefit of both the company and creditors.
An administration requires that a licensed insolvency practitioner (such as ourselves) act as the ‘administrator’. In assuming the role of administrator, for the period of the company administration (usually no more than 12 months), the insolvency practitioner takes control of the company. They fulfil the purpose of the administration, with the continued legal protection from creditors.
At its end.
There are several exit routes available when the administration reaches a conclusion. This may include handing back the business to the existing owners or where the goal is corporate restructuring and turnaround, the company may enter into a CVA (company voluntary arrangement) therefore giving control back to the directors.
On occasion, before company administration occurs a pre pack sale may be agreed, shortening the administration period.
Action For: Winding Up Petitions, Receiverships,
Distraints, Walking Possession, Repossession
*Please note, a company administration is different to an administrative receivership.