personal

corporate

contact

West Advisory Insolvency Shropshire

0333 4444 344      info@westadvisory.co.uk

Administration

 

The corporate recovery procedure

 

The main objective of an Administration is to provide breathing space to a Company whilst a restructuring plan is formulated and carried out.  The process requires a Licensed Insolvency Practitioner to act as the Administrator and manage the affairs of the Company.

 

The Administrator must perform their functions with the objectives of:

 

1.     Rescuing the Company as a going concern should be the primary objective; or

 

2.     if a rescue is not reasonably practicable, achieving a better result for the Company’s creditors than would be likely in a liquidation (possibly by trading whilst seeking a buyer for the business as a going concern) ;  or

 

3.     Realising property in order to make a distribution to one or more secured of preferential creditors.  This objective can only be pursued where it is not reasonably practicable to achieve either objective one or two.

 

 

A Company can be placed into Administration by either a Floating Charge Holder (i.e. the bank if they have a registered charge at Companies House); the Company Director(s), or any creditor via Court.

 

Once appointed, the Administrator will manage the Company’s affairs, business and property, submitting regular reports to all parties.

 

Advantages of an Administration:

 

•   Provides an automatic moratorium – preventing creditors from taking legal action, providing breathing space to strategize a survival plan.

 

•   The business can continue.

 

•   Employees contracts continue

 

•   The procedure provides an opportunity to explore restructuring plans, whilst carving off non-profitable parts of the business.

 

•   Preservation of business/assets/goodwill, resulting in a potentially better return to creditors than in Liquidation.

 

•   Better return to creditors – linked to its statutory Purpose is that the realisations in this procedure will generally be greater than the outcome in Liquidation.

 

Disadvantages of Administration:

 

• Stigma – The procedure and appointment of administrators is advertised in the London gazette and updated at Companies House. It demonstrates the company’s insolvent position and could be harmful to a business.

 

• Directors lose control and the reigns handed to the appointed Administrator.

 

 

 

Alternatives to Administration include a Company Voluntary Arrangement or ceasing trade and entering Voluntary Liquidation.

0333 4444 344

free & 100% confidential

 

Registered in England & Wales No.12957349

West Advisory - Insolvency Practitioners R3 Member
Insolvency Shrewsbury & Telford

e-Innovation centre

Telford, TF2 9FT

© 2022 West Advisory Ltd  |  All rights reserved

West Advisory Insolvency Shropshire
West Advisory - Licensed Insolvency Practitioners ICAEW
West Advisory - Insolvency Practitioners R3 Member
West Advisory Insolvency Shropshire
West Advisory - Licensed Insolvency Practitioners ICAEW
West Advisory - Insolvency Practitioners R3 Member

0333 4444 344

West Advisory - Licensed Insolvency Practitioners ICAEW
West Advisory - Insolvency Practitioners R3 Member
Insolvency Shrewsbury & Telford