Advantages v Disadvantages of Administration

Usually, Administration is used to save all or part of a viable business and to increase the value and the return to the creditors. There is no minimum company size requirement for an Administration.

The advantages of Administration

  • There is a Moratorium which protects the business from any legal action and any winding up. A creditor can only wind up the company or remove charged assets with the consent of the Administrator or the Court.
  • It will help give continuity to the customers and employees if the business can be rescued.
  • It is a faster process to get into Administration than liquidation.

The disadvantages of Administration

  • There is a loss of control for the directors as the Administrator takes over the supervision of the business.
  • There will be an investigation into what happened and why it went wrong, and a report must be made to the Insolvency Service in every case. This report is confidential.
  • Employees have an automatic right to transfer to any new business owner. A Creditors Voluntary Liquidation may be a better solution. TUPE does not apply to employees in a liquidation.
  • The professional costs can be expensive to keep a company in Administration.

David Kirk did exactly what he said he would. I’d be lost without Administration. Without David, we would have gone bankrupt by now. Really good

Sophie M