It is now possible for the company and its directors to apply to the court to put the company into Administration through a new streamlined process that cuts out much of the previous expense of applying to the High Court.
The aim of an Administration is to protect companies from their creditors while a restructuring plan is completed. The process requires a licensed insolvency practitioner to act as the Administrator.
There must be three objectives for the Administration:
1. Rescuing the company as a going concern.
2. Achieving a better result for the company’s creditors than would be likely in a liquidation.
3. Realising property in order to make a distribution to secured and/or preferential creditors.
Floating charge holders, normally banks, can apply to appoint their own choice of Administrator. In cases where speed is essential, the rules provide for filing a notice of appointment during times when the court is not open for business. The filing will bring into effect an interim moratorium on insolvency proceedings and other legal processes being taken against the company.
The Enterprise Act 2002 introduced a time limit of twelve months for an Administration, although this can be extended by the consent of the creditors or Court. The Administrator is also required to work within a time frame. Proposals will include full details of appointment and how the Administrator will achieve the purpose of the Administration together with a copy of the statement of the company's affairs. A copy of the proposals will be filed with the Registrar of Companies and, included with each creditors' copy of the Administrator's proposals will be an invitation to an initial creditors' meeting at which creditors will vote on the proposals and whether or not to accept them. This meeting must be held within 10 weeks of the date of Administration. Proposals can be accepted by a majority vote in value of claims, modified and then either accepted or rejected. If rejected, then the Administrator must seek further directions.
If accepted, the Administrator will manage the company's affairs, business and property in accordance with the proposals, must submit regular progress reports to all creditors, the court and the registrar of companies covering each six month period from the date of Administration until the Administration ends or until he ceases to act.
BCR offer insolvency services throughout Staffordshire, Shropshire, Cheshire and Lancashire with insolvency practitioners helping individuals and companies in Stoke on Trent, Shrewsbury, Telford, Bolton, Preston, Blackburn, Stockport and Manchester.