- Company Administration is a business rescue process used by insolvent companies
- A 1 year process that typically involves the sale of the business and assets
- The Enterprise Act 2002 has helped Administration become; easier to enter, cheaper, more efficient
What is Company Administration?
If your company is in an insolvent position but has the possibility of future profitability then an Administration process may help to restructure the company to achieve business rescue.
There are three main reasons why a company would enter Administration:
- Rescue the company as a going concern
- Achieve a better result for the company’s creditors as a whole than if the company were wound up
- Realise property in order to make a distribution to one or more secured or preferential creditors
A typical scenario for a company entering Administration is for it to be sold; either via Pre-Pack Administration which is a closed sale process, (though these are increasing rare), or by an open sale via marketing activities within the Administration process.
The company administration advisors (Insolvency Practitioner) must assess whether the business is likely to have a viable future by looking at books & records and cash flow forecasts. If the Insolvency Practitioner agrees that Administration is a viable option then they can be appointed as the company’s Administrator. If however they deem the company to be un-fit for future trading, liquidation will typically be the next best option to pursue with.