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A constructive way of preserving a company’s business or achieving a better return for creditors than a liquidation. A licensed insolvency practitioner is appointed as administrator on the petition of either the company, the directors or one or more creditors.
Administration is a process of insolvency that constructively preserves a company or achieves a better return for creditors than simply liquidating. During this process, a licenced insolvency practitioner is appointed as administrator on the petition of either the company, the directors or one or more creditors. The administrator is given 8 weeks to send out the formative administrative proposals to all involved creditors. The proposals will include details of the status of the company, the predicted outcome and a basic plan of action that will be followed for the debt to be repaid.
Unlike other insolvency options such as liquidation where the company can no longer be saved from its debts, Administration helps to protect all involved. Administration allows the continuation of trade by transferring any existing business obligations to a new and separate company. This also allows for the preservation of jobs with existing employees being transferred to the new company as part of the deal.
If during Administration a company is able to consistently maintain a healthy cash flow, assets and maintain business agreements, the administrator may be able to produce enough money to either pay off a large sum of the outstanding debt or use it to come to a resolution with creditors. The decision may also be made to begin ‘pre-pack’ administration in which any remaining assets and trades are sold to the new company. This, however, requires the administrator to convince the creditors that this is the best financial solution.
If however, the administrator concludes that the company has no means of recovering from its current debt, the company will be forced to liquidate. This will be made compulsory by the court with all remaining assets being sold and the company itself is dissolved. In this instance an Irwin Insolvency practitioner will handle all final transactions and obligations, ensuring that all directors are protected from any accusations of any illegal trading.
There are several situations in which administration is recommended as a solution:
If you find your business in any of these above situations, it would be advisable to place the company into Administration. At Irwin Insolvency, we have trained and licensed practitioners specialising in insolvency and are able to be appointed as Administrators. We will work to ensure that all the appropriate guidelines are being followed and that the best solution is reached for all involved parties.
This procedure involves the appointment of a licensed insolvency practitioner as an administrative receiver by a bank or other secured lending institution holding a floating charge debenture. The administrative receiver is appointed by the debenture holder when the business is deemed to be in default under the terms of the debenture.
For more information on company administration or if you have any questions as to whether this is a suitable option for your company, please feel free to call us today on 0800 009 3173 for a free consultation.