Administration
The objectives of an administration under the 1986 Act as revised by Schedule 16 of the Enterprise Act 2002 and coming into effect in September 2003 are in order:-
1. To rescue the company as a going concern.
2. Achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up.
3. Realising property in order to make a distribution to one or more secured or preferential creditors.
4. The administrator is obliged to give primacy to rescue measures and is able to distribute directly to creditors with the sanction of the court.
Administrations traditionally have been very costly because of the heavy involvement of the insolvency practitioner and staff in running the company and were only really suitable for very large concerns. The changes introduced in 2003 are aimed at making entry into administration easier, faster and cheaper. They are a major contributory factor in the recent increase in popularity of pre-pack administration.
Whilst in administration the administrator may take measures to make the business more viable, for example downsizing and tightening financial and credit controls.
Within eight weeks of the company going into administration, the administrator must send to creditors details of the administrator’s proposals for achieving the objective of the administration. In certain circumstances a creditors’ meeting will be held, usually where a dividend to unsecured creditors is expected to be paid.
Administration is also often used during the pre-pack process as can be seen in the pre-pack insolvency section of our website.
Our experienced advisors will evaluate our position and advise whether administration is appropriate and if so we will guide you through the whole process. Should the directors have any interest in buying the business back, one of our finance brokers will even be able to assist in raising the necessary finance.
The earlier in the process we get involved, the more useful we can be. Therefore do not keep living in denial, if the danger signs are there contact us and let us help manage the situation and reduce your stress levels.
