What is administration good for?
An administration procedure effectively stops an out of control train in its tracks.
An administration is good for when you are under financial pressure and do not have a lot of time. Typically it is used to give you some breathing space whilst all the options are considered.
Administration might be a better option than liquidation. As regulated administrators, we have the power to trade a company giving us the ability to sell the business as a going concern or other options to hopefully maximise realisations for everyone.
If the best option is to sell the business then all of the company’s employees will transfer across to the new owners. Although this is good news for the employees it is not always good news for the buyer as they will not be able to pick and choose who they take on. Sometimes this can deter a potential purchaser from buying the business or it might result in a reduced sales price.
Administration can be used to:
- Avoid the compulsory winding up / liquidation of a company and cessation of trade.
- Maximise realisations
- Rescue part or whole of the business, including protecting employee jobs.