If your company is struggling to pay its creditors and is starting to face pressure, then Company Administration could provide a means of rescuing your business.
Company Administration is an insolvency procedure whereby we, as your appointed insolvency practitioner, would look to achieve one of the following outcomes:
To rescue the company as a going concern
We take measures that allow the company to become viable again. We also protect the company from legal action until the business is ready to be handed back to the directors or sold on.
To achieve a better result than the company being wound up
We aim to achieve greater value from the company’s assets than would likely be achieved if the company were to be wound up.
To realise the value of property in order to make a distribution to one or more selected or preferential creditors
We may decide it is best to sell off some company property in order to raise funds to satisfy debts to creditors, and to make the business viable again.
For more information and advice on what would be best for your business, you can contact us at any time via telephone, email or online live chat.
How Does a Company Enter Into Administration?
Firstly, if your business is struggling and facing pressure from creditors, you should seek advice from an experienced insolvency practitioner to determine whether company administration would be the best course of action to save your company. You can contact us at any time via telephone, email or online live chat for advice and guidance. As a national insolvency practitioner, we can visit you at your office – wherever you are located – to look into your situation and advise you on your options.
Then, on the advice of an insolvency practitioner, your company director or directors may decide to put your insolvent company into administration.
As your appointed insolvency practitioner, we would act as your company’s administrator – the administrator works with the director for the best results.
We will write to your creditors and Companies House to say that we have been appointed as your company administrator.
We then have 8 weeks to devise a plan and write a statement explaining how we plan to act. The statement will detail information about the current status of the company, how we plan to repay debts to the company’s creditors, and our anticipated outcome.
At the end of the 8 week period, we will send a copy of this statement to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting.
What Happens During Company Administration?
During the period of administration, will work to pay creditors however we deem most effective. This could include:
- Carrying on trading so that any work can be finished, paid for, and money can be raised.
- Restructuring the organisation to make it more efficient. This could involve reducing staffing levels and closing unprofitable branches or divisions.
- Selling business assets and stock. This would release cash to pay off debts to creditors.
- Selling parts of the business, or the business as a whole, to a new owner. This would allow the business to carry on trading under new ownership, fulfilling its orders, and keeping staff and clients in place.
Company administration can be an effective company rescue solution for some insolvent businesses.
For more advice and guidance on whether company administration is right for your business, you can contact us at any time via telephone, email or online live chat.
When Does The Company Administration Process Come To An End?
Your company would come out of administration when either:
- We have achieved the purpose of the administration as set out in the administration statement and the business is viable again. This could be once an agreement has been reached with creditors, or upon completion of a sale of the business.
- When our term as the administrator ends. This happens automatically after one year, but it can be renewed by the Court or through the consent of your company's creditors.
The Advantages and Disadvantages of Company Administration
When considering whether to put your company into administration, it is important to understand the pros and cons of this company rescue procedure.
The Advantages of Company Administration
- Once your company goes into administration, any legal action being taken by your creditors is halted. So, during the period of administration, your company is protected from winding up orders and the threat of being put into compulsory liquidation.
- As an appointed insolvency practitioner, we would act as administrator. This means that the weight of running your insolvent company is taken off your shoulders and we can make objective decisions that are in the best interests of the company and its creditors.
- As the company administrator, we would have the time to communicate a clear picture of your company's finances to its creditors, detailing how we intend to carry out the company administration and how we will realise funds to pay debts to creditors. This helps to relieve the pressure from you.
- Administration prevents the financial position of the company’s creditors from worsening.
- During the administration process, we may be able to propose a Company Voluntary Arrangement. This could provide an amicable and achievable way for your company to pay its debts to creditors in manageable instalments over time, whilst working its way back to viability.
The Disadvantages of Company Administration
- During the company administration process, the directors of your company are no longer in control. This can be difficult for some directors to accept and come to terms with.
- Once a company enters into administration, it becomes public knowledge. As part of the administration process, we are required to publish a notice of the appointment of an administrator. All correspondence must include a note that specifies that the company is "in administration". We would also be required to inform your creditors and employees that the company has gone into administration.
- In some circumstances, the bank or one of your creditors may have the right to appoint their own administrator.
- Depending on the particular circumstances of the case, putting a company into administration can be a financially costly company rescue solution.
More Information, Advice & Guidance on Company Administration
The prospect of putting your company into administration can seem daunting and stressful. Though, in some cases, it is the only company rescue procedure that could save a company from liquidation. If your company is facing pressure from creditors, it is important to act quickly to avoid court action and achieve the best possible result.
We can assess your case and advise you so that you can make an informed decision. We have guided many businesses through the administration process, acting as company administrator to take control of the business and rescue it from insolvency. If administration is the right decision for your business, we can manage the process to remove the stress from you and protect your company against action from creditors.
If you would like to know more about the administration process and whether it is right for your company, we are always available to answer any questions over the phone, via email or live chat. We can visit you at your office in absolute confidentiality to discuss your situation and advise you on your options.