Administration should achieve one of three statutory objectives. These are:
1) Rescue the company as a going concern.
2) If the above is not possible, to achieve a better outcome for creditors than if the company was placed into liquidation.
3) If the above two are not achievable, to realise the company’s property with a view to paying secured or preferential creditors.
An End To Pressure From Creditors
Once the administration process has commenced, it prevents any legal action being taken against the company, and stops any assets being removed, without a Court Order or the administrator’s permission.
What Happens To A Business In Administration?
When a company goes into administration an insolvency practitioner – such as those at BCR – is put in charge of the company by assuming all control of its assets, business operation, staff etc. This is to ensure the company is managed correctly and to protect the interests of the company’s creditors.
How Does A Company Go Into Administration?
A company can be placed into administration by a court order, by a floating charge holder (usually a bank), or the company or its directors can appoint an administrator voluntarily. The process itself is very quick, taking merely a few hours once the process is put in motion.
No administration order will be granted unless the holders of all qualifying floating charges have been given 5 business days written notice of the company’s or directors’ intention to appoint an administrator.
The floating charge holder will have to right to appoint their own choice of administrator if they wish to do so.
Find Out More
If you believe that administration may help you, or if you simply need advice about which way to turn next with your business then it would certainly be a good idea to get in touch with one of our insolvency practitioners for a free professional and confidential consultation. Before that though you may want to take a look at our free Recovery Guide.
If your business is in trouble - if you are facing creditor debts, HMRC debts, or struggling to meet payroll, then you could be facing liquidation. Can your business be saved? Download our free guide, 'What To Do When You Are Facing Liquidation' now.