Administration

This is a corporate insolvency procedure where the directors, the company, the creditors or the Court can appoint an insolvency practitioner as Administrator. The procedure is principally designed to, either rescue the company or to realise its assets in a way that is likely to result in a better result for all creditors or allow a distribution to preferential or secured creditors.

Upon appointment, the administrator takes executive control over the company, its assets and its business operations. While doing this, he/she formulates a plan of action to be proposed to creditors for how the purposes of the administration will be achieved.

In some ways, this procedure and terminal insolvency proceedings such as voluntary liquidation, are very similar. However, key differences include the speed at which an appointment takes effect, the statutory moratorium which protects assets by preventing certain enforcement actions and also, in certain circumstances, the ability to sell the business and assets of the Company as a going concern. This could potentially save jobs, preserve the value of company assets and ensure a better result for creditors.

If appropriate administration also facilitates a sale via a pre-packaged administration process; where the company’s business/assets are valued and marketed and a proposed sale is agreed prior to the company entering administration. The business and assets can then be sold immediately upon the company entering administration providing a seamless transfer to the purchasing entity and maintaining the business moving forward. Such sales can also be completed to connected parties, however the process involves significantly more scrutiny and involves a requirement for any proposed connection party to seek sanction for the proposed transaction from an independent pre-pack pool assessor.