- A process only used by pre 15/09/03 floating charge holders
- The Enterprise Act 2002 has made company Administration a better alternative
- This process is slowly becoming obsolete
What is an Administrative Receivership?
Administrative Receivership is when a creditor who has a floating charge over a company appoints an Insolvency Practitioner to act as Administrative Receiver to recover the money owed to them.
FAQ: It was the intention of the Government to abolish Administration Receiverships and replace it entirely with Administration, but the Insolvency Act which was amended by the Enterprise Act 2002 still allows floating charge holders to appoint an Administrative Receiver if their charge was created prior to 15/09/03.
Floating charge holders will be a creditor who has a charge over assets such as cash and stock within a company. A typical example of a floating charge holder would be a bank and they would be the most likely creditors to initiate this process.
What would be the process to use now?
Since the Enterprise Act 2002 amended the entrance and cost of Company Administration, it is now the most appropriate and common Administration process to use. This process can be started by any type of creditor or the company director themselves.
The most important difference between Administrative Receivership and Company Administration is that the duty of the Administrator stretches beyond that of an Administrative Receiver. An Administrator’s duty is to all creditors whereas that of an Administrative Receiver is only to the secured creditors.
How can FA Simms & Partners help?
At FA Simms & Partners we believe that the Administration process should be used to rescue the company as a “going concern” and if we feel this will not be possible then we suggest alternative solutions that will be more appropriate.
When a company director mentions entering Administration all possible options are explained to them and the pros and cons of Administration are explained along with alternative procedures and options.