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What is Company Administration?
Administration may be appropriate if your business is financially distressed, but has a business with an underlying value. If your company has a strong order book, and a strong brand that may be of interest to either the existing management team, or a third party, then the possibility of a company Administration should be explored.
What legal protection does Administration offer?
Administration offers legal protection from your creditors, and ensures that any ongoing legal action is stopped.
This enables you to work with a Licensed Insolvency Practitioner, who will endeavour to understand the issues the business has experienced, but also the inner workings and financial position of the company.
How does Company Administration work?
We will seek to formulate the most appropriate company Administration strategy for your company, firstly attempting to understand whether the business can be rescued or restructured, by way of proposing a CVA, or considering whether a sale of the business (either as a whole, or in part) can be achieved.
The business is able to continue to trade during this short period, whilst the options are assessed. In the eventuality that a sale is proposed, this can be completed by way of a pre-packaged sale, known as a Pre-pack Administration, or after a short term period during Administration if appropriate.
In the majority of cases, by achieving a rescue of the Company, or a sale of the business in Administration, the value of the Company’s Goodwill and customer relationships will be preserved, together with all or a majority of the existing workforce.
Appointing an Administrator
Whilst it is a difficult decision to place your company into Administration, in most cases, the appointment can be lead by the Directors. This enables you to choose the Insolvency Practitioner that you wish to work with.
In these circumstances, the company Administration process is started by the directors filing a Notice of Intention to Appoint an Administrator in Court. This is a document that we will prepare for you to sign, and arrange for the filing in Court. Once filed, this Notice protects the Company from any ongoing or potential legal action for a period of 10 business days.
The Notice is not a matter of public record, and you will only be required to disclose it to any creditor of the Company which holds registered security, such as a bank or funder.
At this stage of the company Administration process, your customers and employees will not need to be advised that the Administration process has been started, whilst the possibility of rescuing or selling the business is explored further.
What Happens Next?
During this period of protection, we will work with you to explore the options above to ascertain the correct time for the company to enter Administration. We will support your needs during this period, such as overseeing any critical expenditure needs of the company.
We will also assess whether an alternative insolvency process may be more appropriate, such as proposing a CVA, or a Liquidation. Should we be appointed as Administrators, our role is to maximise the value of the business and assets, often by selling the business as a whole.
In most cases, the business will be of most value to the existing management team, who hold the prior knowledge of the business, and the key customer relationships. In these circumstances, Administration offers you the opportunity of exploring the possibility of buying back the business and assets, free from the company’s historic debts. This enables you to retain all or part of the existing workforce, and preserve the value of the Company’s goodwill and work in progress.
Depending on the nature of the assets and security available, we are usually able to agree to payment terms in respect of the sales consideration, thereby assisting you with the initial working capital requirements of your new company.
What are the Benefits of Administration?
- Protection from your company’s creditors
- Offers the opportunity for your business to be rescued / resurrected
- You can lead the process, choosing the Administrator you wish to work with
- The possibility of a restructure plan can be explored, to rescue the business in its current form