Who appoints an administrator?

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Administrators act as officers of the court and can be appointed by directors or shareholders of an insolvent company. Additionally, secured creditors who hold qualifying charges can appoint Administrators, as can creditors of the company for unpaid debts.

Directors or Shareholders Appointment

Provided there are no outstanding winding-up petitions against the company, the process for appointing an Administrator by directors or shareholders is straightforward and involves the simple filing of form(s) at court. It does not require any court hearing or report for consideration and this is referred to as an “out of court” appointment. This type of appointment can be effected immediately or within a 10-day period during which the company is protected from any further creditor action. However, if the company has an outstanding winding-up petition, then the “out of court” route is no longer available to directors or shareholders. In this instance, a formal court application for an Administration Order via a solicitor will be required. Any application should also be supported by a report to the court by an Insolvency Practitioner to explain why Administration is preferable to liquidation in light of the winding-up petition. Consequently, this is a time consuming and costly process and it is, therefore, preferable for advice to be received before a winding-up petition lands.

Creditors Appointment

Creditors can apply to the court for an Administration Order for any unpaid debts. As with the director/shareholders court application, this method also involves the production of a report via a solicitor and Insolvency Practitioner, which can be costly as it is not something that is utilised very often. Finally, the holder of qualifying security can place the company into Administration. To do this they must hold a Floating Charge dated after September 2003 and the debt must be enforceable with demand for repayment having lapsed. In this scenario, the appointment can be affected by the simple filing of a prescribed notice to court with the name of the proposed Administrators attached. Once filed the appointment is immediate. Separately, where the company has a qualifying secured creditor and the directors or shareholders decide to place the company into Administration, via the out of court route referred to earlier, then the secured creditor is entitled to receive a formal five days notice of the intention to appoint an administrator. During this period the secured creditor can elect to appoint their own choice of Administrator rather than the choice of the directors or shareholders if they so wish. Typical examples of qualifying secured creditors include banks and other financial institutions who have funded the company via overdraft, loan or ongoing invoice finance/factoring agreements.

Contact us for expert insolvency advice

The Insolvency Experts are experienced in these matters and have an excellent relationship and reputation within the banks and other finance houses. As such, if Administration is the correct option we are able to liaise with the secured creditors on the directors/shareholders behalf to ensure the Administration proceeds without them appointing their own Administrators. If you are a director or shareholder and believe that your company may require further advice on Administration or any further business debt advice. Contact us online or speak to a member of our team directly by calling 0300 303 8284.