The possible outcomes
- Part or whole of the business is rescued and jobs saved after a brief period of trading
- The company continues to trade under the administration umbrella for a brief period whilst any remaining profitable contracts are completed
- Assets are sold off in order to maximise realisations to pay secured and preferential creditors
- A mixture of the 3 above occur
The administrator will usually have decided upon a strategy before the administration takes effect.
Subject to advice from professional agents, the administrators will look to trade the business for a short period (on average no longer than 6 weeks) in order to market the business for sale and find a buyer for part or the whole of the business on a going concern basis.
Such a sale might be to third parties or may be back to the existing directors in a new entity (known as a phoenix).
If a sale as a going concern is not viable then the administrators may decide to continue to trade the company in order to complete work in progress / existing contracts.
In such a case some employees may be made immediately redundant upon administration with the company continuing to employee only those necessary to complete the profitable work. Once the contracts have been completed the remaining employees will be made redundant.