How does administration Protect?
An administration moratorium may be obtained which ring fences out actions taken against the company from creditors, such as forcing it into liquidation.
In the interim period before an administrator is formally appointed a moratorium can be obtained preventing the company’s creditors from beginning or continuing insolvency proceedings or legal processes against the company (without special permission form the court).
Specifically, once an administration is in place the following applies (subject to certain exemptions):
- The company cannot be placed into voluntary or compulsory winding up / liquidation
- Any petition for the compulsory winding up / liquidation shall be dismissed or suspended
- Any administrative receiver of the company shall vacate office
- Any receiver of part of the company's property shall vacate office on being asked to do so by the administrator
- No steps may be taken to enforce any security over the company's property, or to repossess goods in the company's possession under any hire purchase agreement
- A landlord, or any other person to whom rent is payable, cannot obtain peaceful re-entry to premises let to the company who has not complied with any term or condition of the tenancy
- No other legal process (including legal proceedings, execution, distress and diligence) may be commenced against the company or its property.