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What is administration?

"We have creditors threatening winding-up petitions, we cannot pay taxes on time, and our bank is not helping. I fear a real risk of imminent closure! But the business CAN be viable. Can we protect the company and its assets so it can be properly restructured?

What is administration? What does it mean to appoint an administrator and how does it work? Who can appoint an administrator? What is a pre pack administration? How do you do an administration followed by CVA?

If you do not wish to read all the guides below then feel free to call any of the directors on 07833 240747 or our main office number 01289 309431 for a no obligation chat.

These pages and guides will help you answer these questions and learn all about the administration tool.

Or you can view the video below



This page contains a simple guide and further links to more detailed guides to this insolvency mechanism read down the page or print it off for easy reading later.

What is administration - a simple guide

Administration is a very powerful process for gaining control, when a company is insolvent and facing serious threats from creditors. The Court may appoint a licensed insolvency practitioner as administrator. This places a moratorium around the company and stops all legal actions, (lots of technical stuff required for this! if you want to know - see longer guides).

The administration must have a purpose and the Government encourages the use of company rescue mechanisms after Administration.

Under the administration option, it is possible for the company and its directors (or a creditor like the bank) to apply to the court to put the company into administration through a streamlined process, by applying to the High Court.

However,the law requires that any finance provider (like a bank or lender), with the appropriate security, is contacted and the aims of the administration be discussed and approved. The finance provider must have a fixed and floating charge (usually under a debenture) and the charge holder will need to give permission for the process to go ahead. Five days clear notice is required.

Between July and September 2014,  there were 492 administrations.

Useful guides to administration:

Administration - a detailed guide - How the process works in detail.
Administration flowcharts - All you need to know about the various Administration options and processes in a picture format.
What is Administration FAQ's Frequently asked questions from our users.
Administration case studies examples of administration case studies
Administration versus CVA What's best for you? Read this for pros and cons of each tool.
Pre-packaged administration - Our new guide to the pre-pack administration tool.
Case Study for Pre-pack Administration - Lean how a recruitment company was restructured using pre pack admin.

Guide to VAT security deposits - if you start again as a new company,you may be required to pay a deposit against future VAT liabilities. This is ESSENTIAL READING for any business in this position.

What is a pre-pack administration or administration pre-pack sale?

The pre packaged administration sale is currently a very popular method,However, there is increasing media coverage of creditors' dismay at seeing their "debt dumped" by a former customer.

The company prepares itself to enter administration and sell its assets to a new company ("newco") or to an existing 3rd party company. This is a very powerful, far reaching process that can protect the BUSINESS, but usually the old company (oldco) is liquidated afterwards. See Pre-Packaged Administration - our new guide to the pre-pack administration tool for more information. Alternatively call Keith Steven now on 07974 086779 to discuss how pre-pack administration may or may not work for your company?

What is administration followed by CVA

Basically the company enters administration to get protection from creditors. The administrator then works with the company's directors to produce his/her administration proposals. Once these are accepted the administrator hands control back to the company's board. This is powerful tool despite the fact that it is expensive and directors are not in control during the administration period. We have a more detailed page on the administration process. It is less common than the Government would like to see.

Got questions? What is company administration? What does going into administration mean? What is administration pre-pack? How does a company go into pre pack administration? For answers to all these questions read our guides or call us now on 01289 309431 or 0800 9700539. Our trained, high quality advisors will help you.

Employees Rights in Administration - Our new guide for employees affected by administration.


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