When a company cannot pay its debts, administration provides a breathing space in which to stabilise its financial position and put it back on the road to recovery or to wind it up in a way that is as fair as possible to its creditors.

The company will be in the hands of an administrator – a licensed insolvency practitioner – who will run the business and control its assets. This means that they will make decisions over issues such as renegotiating or cancelling contracts or whether employees need to be made redundant.

However, the company will also be protected from legal action by creditors while it is in administration.

The administrator can be appointed directly by the company, its directors or certain creditors.

The aim of the administrator is to:

  • rescue the company, for example by negotiating a company voluntary arrangement (CVA) so that it can continue to trade, or selling it as a going concern
  • achieve a better result for creditors through the administration that if it were wound up straightaway
  • realise assets to pay creditors and close the company down or close down the company if there are no funds available.

The administration ends when the administrator believes the purpose of the administration has been achieved or that this is not possible. There is a one-year time limit for administrations but these can be extended if creditors agree or the courts give permission.

At Haslers, our insolvency practitioners are experienced in acting as administrators and can provide expert advice to company directors and creditors on administration and other insolvency procedures.

To find out more about our Administration services, please contact us.