Can I save my business with Administration?

In short

Yes – administration need not be the end of a business.  Administration can be an opportunity for a company to continue in whole or part.

In more detail

If a company goes into administration and the company can’t be saved then there may be a good chance that the business can be saved and some jobs preserved.  A pre-pack (sale of a business and assets) administration can be particularly useful to ensure that the value of the business is preserved too.

The statutory purpose of administration is to:

  • Rescue the company as a going concern.
  • Achieve a better result for the company’s creditors than would be likely if the company were placed into liquidation.
  • Realise property in order to make a distribution to one or more secured or preferential creditors.

What happens when the company is placed in administration?

Once placed into administration a company can continue to trade although the daily management and control passes from the directors to the appointed licensed insolvency practitioner who will act as administrator.

The administrators’ role is to formulate proposals for creditors to vote on.  If there are sufficient funds available creditors and shareholders get paid in the following order:

  • Secured creditors (Fixed Charge Creditors)
  • Preferential creditors (employees, HMRC)
  • Floating Charge Creditors
  • Unsecured creditors (trade creditors, suppliers, customers)
  • Shareholders/members

What next?

Administration will end automatically after twelve months unless the administrator, creditors or the Court grant extensions.  Depending on the administration proposals the company may have:

  • Been rescued – the company would be passed back to the directors
  • Gone into liquidation or proposed a CVA
  • Been dissolved

For administration advice contact our experts today on 0800 254 5494