Company ADMINISTRATION
COMPANY ADMINISTRATION
At administration.co.uk, we specialise in company administration, which means we’re able to support businesses through the administration process to bring the company back into profitability, offering realistic and expert advice every step of the way.
We are authorised by the Institute of Chartered Accountants in England and Wales, we also have an enabling bond from Marsh and professional indemnity insurance to ensure your company has complete peace of mind when seeking our guidance.
Our expert team has many years of experience in company administration and can offer you a free initial consultation to give us a better understanding of your company’s financial situation.
It stops the company being wound up
It stops secured creditors removing their assets
Getting into Administration usually takes between one and five days
What is Company Administration?
Company administration means that a Licensed Insolvency Practitioner, such as ourselves, is appointed as an administrator to restructure the company, with the goal of either turning it back into a profitable business or negotiating a sale to preserve the business’s value and its employees.
Companies and partnerships in the UK can use administration as a fast legal process to protect a business from creditor action and give breathing space to find a solution, as administration stops all legal and creditor action.
Basically, administration offers valuable breathing room for a business as it restructures and aims for positive cash flow, finds a buyer or is wound up and liquidated.
How Does My Company Enter Administration?
In order for your business to qualify for administration, there are certain circumstances that need to be met, such as:
- The business must be considered insolvent, but still able to achieve specific statutory objectives established by existing insolvency laws.
- It should be under significant creditor pressure so that entering into administration would prevent the threat of compulsory liquidation.
The process of getting a company into Administration has a few routes including:
Who Chooses an Insolvency Practitioner?
The choice of Administrator is usually a board of directors’ decision. However, once a company is in administration it is the administrator who runs the business (usually with the help of the current directors or management team).
It is worth noting that the directors’ powers cease upon entering administration although they still have to cooperate and assist the appointed Administrator.
The Administrator has to make a report to creditors (called the ‘proposals’) within eight weeks of appointment. There is then an interim report at six months and annual reports as well as a final report on closure.
The entire process usually lasts for up to one year but can be extended for a longer period if necessary.
The Process of Company Administration
Opting for administration is never a straightforward process, and is likely to be both daunting and stressful for everyone involved. However, it’s worth always trying to bear in mind that administration can offer your business the best chance of recovery.
Getting assistance from an insolvency practitioner such as ourselves at administration.co.uk, can help you understand your responsibilities and obligations as a director, in a difficult situation for everyone associated with the business.
Appointment
The very first step in the process is the appointment of the Administrator. Typically, the board of directors will select and appoint their desired administrator. When this happens, a court order isn’t necessary and the paperwork can be filled out and submitted to the Court. If the company has secured creditors holding a floating charge, they must be notified 5 days before the administration is served.
Upon appointment, the Administrator is responsible for acting in the best interests of the creditors and the business. This starts with an in-depth proposal which outlines the work that needs to be undertaken to make the most of the company assets to repay creditors.
Confirmation of Appointment
Upon appointment, all creditor information must be passed to the administrator to ensure they can notify the creditors of the appointment, which must also be advertised in the London Gazette.
The directors must also provide the administrator with a Statement of Company’s Affairs within 11 days. This must contain all details of the company’s assets and liabilities, and must also identify any assets which are fixed or floating charges.
Proposal
The administrator has up to 8 weeks to submit proposals of their intended strategies to the company’s creditors. Every proposal must include complete details of the administrator’s appointment, the Statement of Affairs and details of how they intend to proceed with the administration, and ultimately how they expect it to conclude.
Reports
Should the administration process take longer than 6 months, the administrator is expected to disclose a progress report to the creditors as well as to Companies House.
What Are My Options For Administration?
Depending on the health of your business, there are numerous options when it comes to administration.
At administration.co.uk, we can offer our expert guidance and understanding to help you decide which option is best for you and your business, these include:
Company Rescue
We understand that this is the primary target for most business owners, and in many cases this is a realistic prospect for many businesses that enter administration.
At administration.co.uk, we will offer our honest and realistic advice to ensure that, where possible, your company can get back on track and trading again.
Pre-Pack Administration
A pre-pack administration is a process where a business is prepared for sale before the formal appointment of an administrator. The aim is to complete the sale immediately after the administrator’s appointment to maximise the value of goodwill and minimise the loss of customers and trade.
This type of sale helps to protect the brand, the business itself, and all company assets before the old company is wound up during the administration process.
Sale as a Going Concern
Once the company enters administration, the Administrator will assess the appropriate course of action.
This could involve attempting to sell the business, or part of it, as a ‘going concern’, or alternatively, gradually winding down operations and selling off assets or completing any work in progress.
Company Voluntary Arrangement (CVA)
A CVA, although relatively rare, is a viable option which an administrator can choose if they believe the company is still viable in the long-term.
This allows the company to keep trading; retaining the name, company number, employees, suppliers and customers. An approved CVA would allow the business to come out of administration, with the administrator becoming the supervisor.
Liquidation
Upon administration, should there still be assets that need to be realised or dividends to pay to creditors, this can be achieved by placing the company into liquidation.
Dissolution
If the dissolution is appropriate, there is no need to place the company into liquidation.
Typically this occurs when there is no cash or other assets available to pay a dissolution to creditors. The company will cease trading and be removed from the company record.
EXECUTIVE SUMMARY
- Administration protects a business and stops all creditor action.
- It can take just one day to get into Administration, so is very fast.
- The Administrator is normally chosen by the directors.
- We do all the paperwork for you.
Pros and Cons of Company Administration
Administration is typically the most common course of action if your company is facing financial distress, but still retains inherent value.
If your business is still experiencing strong trade and has a trusted brand presence, then administration is usually the best way to turn around your business finances and get back on the road to profitability.
However, as with anything, there are both advantages and disadvantages to opting for this course of action, which are:
Advantages
- Protection from company creditors.
- Offers the best possible opportunity for your company to be rescued.
- A licensed Insolvency Practitioner will step in as the Administrator, which means that all investigations will be carried out above board and with the future interests of the company and its creditors in mind.
- The funds realised during administration are typically greater than during liquidation.
- The administrator can suggest a CVA, which allows some degree of flexibility in which the company can potentially be rescued and the business can resume under the control of the current directors with deferred or reduced payments to creditors.
Disadvantages
- You are no longer in control of your company’s daily operations, from the point in which you file your Notice of Intention to Appoint to the court, your control over the company is transferred to the administrator.
- Details of the administration must be filed with Companies House and posted in the London Gazette, which makes the appointment public knowledge.
- Your appointed administrator must investigate and report on your actions and those of any fellow directors. This can, in some circumstances, lead to director disqualification.
The process of getting a company into Administration has a few routes including:
David Kirk did exactly what he said he would. I’d be lost without Administration. Without David, we would have gone bankrupt by now. Really good
Sophie M
FAQ’s
Company administration is a formal insolvency process designed to help rescue a struggling business or, if that’s not possible, to maximise returns for creditors.
When a company goes into administration, an appointed administrator takes control of its operations and finances.
The administrator’s primary objectives are to try to save the company as a going concern, secure a better outcome for creditors than liquidation, or, if necessary, sell the company’s assets to repay debts.
During administration, the business is protected from legal action by creditors, allowing time to reorganise or prepare for a potential sale.
While both administration and a Company Voluntary Arrangement (CVA) aim to assist a financially distressed company, they have distinct purposes and processes:
Administration:
An administrator takes over the management of the company, protecting it from creditors while attempting either to turn the business around or, if recovery isn’t feasible, liquidate its assets.
CVA:
A CVA is a legally binding agreement between the company and its creditors to repay debts over an agreed period, allowing directors to retain control of operations. It is often used when a business can continue trading with revised debt terms.
In essence, administration involves external management, typically in more severe cases, whereas a CVA is a negotiated debt restructuring agreement with creditor cooperation.
The administration process usually lasts around 12 months, although it can be extended with creditor approval or by court order.
Many significant restructuring actions or asset sales are completed in the first few months, but the overall timeline depends on the complexity of the company, the administrator’s strategy, and creditor negotiations.