In more detail
The three purposes are:
- 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.
- You must appoint an administrator – who must also be a licensed insolvency practitioner.
- The administrator will take over the running of the company from the board of directors and will set about to achieve one of the statutory purposes.
- The administrator has to report and make proposals to creditors within eight weeks.
- The administrator could continue to trade to restore the company back to health or to negotiate a company voluntary arrangement (CVA) with creditors to rescue the Company as a going concern. They could sell the Company’s business and assets as a going concern to achieve the second purpose. They could close the business down and sell the assets off piecemeal to pay the secured or preferential creditors which would achieve the third purpose
- Your company’s administration will end when either the administrator has achieved the purpose of the administration or automatically after one year (although it can be extended).
- An administration is usually followed by a liquidation to distribute the realisations to unsecured creditors or by dissolution.